The Financial Services Authority (FSA) has fined intermediary mortgage firm Rainbow Homeloans £35,000 for systems and controls failings which, it says, exposed around 1000 people to the risk of being sold unsuitable products.
The regulator says the firm has now ceased conducting all regulated business.
But it adds Rainbow Homeloans avoided a larger fine of £50,000 because it admitted it was at fault and agreed to settle at an early stage of the FSA’s investigation.
The FSA found that Rainbow Homeloans’ management had not ensured that, as directors, they were approved to perform their regulated function and had not adequately monitored and controlled the business at all times.
Instead, the regulator says the firm’s management relied to an inappropriate extent on an external consultant for overseeing compliance-related matters and ultimately for ensuring the fair treatment of customers.
The failings in Rainbow Homeloan’s sales process were considered serious as it failed to demonstrate product suitability, to provide customers with relevant key facts illustrations at the right time and handle complaints properly.
Stephen Bland, FSA director for small firms, says the company’s management failed to take adequate responsibility for the business to ensure compliance with the FSA’s principles and rules and the fair treatment of its customers.
He adds: “Where and when appropriate the FSA will use its enforcement powers to ensure that management take seriously the requirement on firms to comply with regulatory requirements and treat customers fairly."
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