The FSA has fined Christopher Davies, director of Newquay Investment Services (2004) Limited, an IFA based in Cornwall, £17,500 for not disclosing to the regulator important information about an adviser Davies had employed at Newquay. This led to an unacceptable risk of customers being recommended unsuitable mortgages, the FSA ruled.
After Newquay had applied to the FSA last year for the adviser to be confirmed as an approved person, Davies became aware that the adviser’s previous employer had suspended the adviser because of concerns about his business methods and ethics including apparently inflating income figures in mortgage applications. Davies raised these concerns with the adviser and concluded that the adviser had lied to him about why he had left his previous employment. Davies then failed to disclose this significantly adverse information to the FSA.
Despite being aware of the concerns of the adviser’s previous employer and of the adviser misleading him on these matters Davies failed to exercise appropriate control over mortgage applications submitted by the adviser. He also failed to consider whether it was appropriate, in light of indications that the adviser was not fit and proper, to allow him to continue giving advice on life and other products and understand the risks associated with ‘fast track’ mortgages and as a result allowed the adviser to submit mortgages of this type to lenders.
Margaret Cole, FSA director of enforcement at the FSA, said: “Davies’ failures exposed Newquay’s customers to an unacceptable risk of being recommended mortgages which may not have been suitable for them and exposed lenders to the risk of offering mortgages on the basis of false or misleading information passed through Newquay.