A FORMER mortgage broker who ran an office in Chester was yesterday fined £100,000 by a financial watchdog.
The Financial Services Authority (FSA) has banned Stephen Jones and hit him with the massive fine – the second largest ever – after finding he had exposed about 1,500 customers to the risk of receiving unsuitable advice.
The FSA has also fined junior partner Simon Poole, who ran the partnership's office in Chester, £7,000 for exposing 750 clients to the risk of purchasing unsuitable mortgages.
Mr Jones, senior partner of Jones & Poole Independent Mortgage Specialists, failed to control his business effectively or to make sure that it met regulatory requirements, and did not treat customers fairly when recommending mortgage contracts, alleged the FSA.
But Mr Jones told the Daily Post he rejected the allegations of dishonesty and fraud, and was seeking legal advice with a view to challenging the FSA’s ruling.
The partnership was formed in 2001/02 and became authorised to carry on regulated activities in relation to regulated mortgage contracts on October 31, 2004.
It traded from Edinburgh House, Clwyd Street, Rhyl, and from the Chester office. The FSA has removed the partner- ship’s authorisation, but Mr Poole has obtained new authorisation to carry on as a sole trader.
The FSA said the £100,000 fine was the second biggest imposed on a mortgage broker since it took over mortgage regulation nearly four years ago.
It alleged that, before a visit from FSA staff, Mr Jones arranged for customers to sign and backdate retrospective documents for completed sales so that it would appear he had created contemporaneous sales documents. He also provided a lender with false income information to support his own mortgage application.
Mr Poole was fined for failing to record whether he had assessed clients’ ability to afford a mort- gage. He also failed to implement changes recommended by a compliance consultant.
The partnership operated in practice as two separate businesses with each partner responsible for his own clients, sales and compliance arrangements and with the two partners having only very limited contact with each other.
Jonathan Phelan, the FSA’s head of retail enforcement, said: "Mr Jones and Mr Poole exposed more than 2,000 of the partnership's customers to the risk of receiving unsuitable advice and losing money.
"Mr Jones's fraudulent mortgage application and his dishonesty in attempting to cover up regulatory failings were completely unacceptable warranting a ban and a large financial penalty.
"Mr Poole's failings were of a lesser order and although they were deserving of a fine he has not been banned."
Mr Phelan added: "It was in effect a dysfunctional partnership. It is important that partnerships which carry on regulated financial services business are organised so they can be controlled as a single business with clear lines of responsibility and accountability."
Mr Poole agreed to settle at an early stage of the FSA's investigation and therefore qualified for a 30% discount under the FSA's executive settlement procedure. Otherwise he would have paid £10,000.
But Mr Jones said he had not heard from the FSA since its enquiries last year and yesterday’s news of the £100,000 fine had come as a complete shock.
He said: "I will be taking legal advice on this because the FSA has implied dishonesty and fraud."
