The FSA has banned three men for mortgage fraud and fined two of them a total of £414,683. The regulator said all three disregarded its rules by knowingly submitting false and misleading information to secure the mortgages for themselves and their customers.
These three prohibitions bring the number of mortgage brokers banned by the FSA to 96.
Mark Bates of Pace Financial Management, Sheffield was fined £264,683 for knowingly being involved in mortgage fraud whilst he was a partner at Pace. He has also been banned from working in regulated financial services.
The fine includes a disgorgement of the £74,683 profit he made by diverting commission to himself and a colleague which should have been paid to Pace.
Bates, in conjunction with an adviser at Pace, also obtained a mortgage for himself using false payslips and P60s. Similarly, he submitted a mortgage application for a client also using false income and employment information. Bates also gave mortgage advice despite not being qualified.
The FSA’s investigation also revealed that Bates had recruited an adviser that he knew had been dismissed twice before for gross misconduct. In this way, Bates wilfully disregarded his obligation to monitor the actions of his staff and effectively allowed the firm to be used for financial crime.
On 18th February 2010, in a case brought by South Yorkshire Police, Bates was found guilty of three offences relating to conspiracy to defraud, money laundering and conspiracy to obtain a money transfer by deception and sentenced to four years imprisonment.
Alan Hill of Pace Financial Management has been fined £150,000 and banned from working in the financial services industry for his misconduct which resulted in Pace committing a breach of Principle 1 of the FSA’s Principles of Business. Principle 1 states that a firm must conduct its business with integrity.
During the FSA’s investigation Hill admitted to manufacturing false documentation then using this to apply for mortgages, fraudulently, for at least six customers.
Hill also admitted to creating false documentation that he knew would be used for mortgage fraud by a third party. In two cases Hill was paid by a third party for doing this.
In March 2009, in a case brought by South Yorkshire Police, Hill pleaded guilty to nine offences of conspiracy to obtain a money transfer by deception, obtaining a money transfer by deception and making false instruments.
On 18th February 2010 Hill was convicted of five further offences to which he previously pleaded not guilty, all of which were related to financial crime. Hill was sentenced to five and a half years imprisonment.
The FSA found that Pace had no involvement in the misconduct committed by Hill or Bates and co-operated fully with the FSA during its investigations.
Waqarul Hassan Shah of K S Financial Services, Manchester, has been banned from working in regulated financial services for knowingly submitting false income figures on a buy-to-let mortgage for himself, inflating his income six-fold from £11,700 to £65,000.
Shah, who was a partner at Manchester-based K S Financial Services, was also found to have acted recklessly by submitting false and misleading details in a customer’s mortgage application.
In addition, the FSA found that Shah failed to put in place adequate systems and controls to prevent false and misleading mortgage applications being submitted to lenders and to ensure customer files were checked.
The FSA would have fined Shah £40,000 had it not been for evidence that the penalty would have caused him serious financial hardship.
Margaret Cole, the FSA’s managing director of enforcement and financial crime, said: “Bates
