The Financial Services Authority (FSA) has fined Best Advice £7,000 for failing to record and retain sufficient personal and financial information about customers.
The regulator says the failings occurred between June 2005 and June 2006 and relate to record keeping by appointed representatives of the mortgage network as part of the regulated advice process.
The FSA says Best Advice failed to keep adequate customer records or inform customers who had made a complaint that they may refer the matter to the Financial Ombudsman Service. The network also failed to take required remedial action required by the FSA after a visit to the firm and showed an inability to demonstrate its reasons for recommending a particular mortgage contract.
Best Advice avoided a larger fine from the FSA by agreeing to settle at an early stage the regulator’s investigation the firm allowing it to qualify for a 30% discount under the FSA’s executive settlement scheme. Without the discount the financial penalty imposed would have been £10,000.
Michael Lord, head of mortgages and credit unions in the small firms division of the FSA, says: "Firms must be able to demonstrate their reasons for recommending a particular mortgage contract and we take record keeping failures very seriously. We expect firms to take any remedial steps identified from supervision visits and will discipline firms that do not respond adequately to supervisors' concerns.
"In this case, Best Advice Mortgage Network Limited is required to appoint a skilled person to review a sample of past business to assess whether, behind the record keeping failures, customers may have been recommended unsuitable mortgage contracts," he adds.
Lord says the regulator is currently conducting a piece of thematic work on the quality of processes for giving advice in mortgage firms.
He warns firms need to ensure they have robust processes in place to fulfil the principle of treating customers fairly and suggests the FSA is looking to keep its promise to get tough with mortgage firms who continue to fail to comply with mortgage regulations.
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