The FSA has fined an adviser firm £10,500 for exposing consumers to the risk of being sold unsuitable equity release products.
The Minel Group, based in Newcastle-upon-Tyne, was guilty of persistent failures in record keeping and deficiencies in systems and controls when selling lifetime mortgages, the regulator says.
In addition to the fine, the FSA says Minel must review its sales of lifetime mortgages between 9 November 2004 and 9 December 2005 to compensate customers for any loss due to unsuitable advice. The firm is no longer able to offer lifetime mortgage advice.
It is the first time the FSA has taken such heavy action against a lifetime mortgage adviser.
The FSA says the firm has insufficient procedures to control its lifetime mortgage business and the quality of advice.
It failed to keep proper records of customer information and did not have proper training procedures in place to ensure effective monitoring of staff competence.
Georgina Philippou, head of retail enforcement at the FSA, says: "The combination of a fine, a past business review, and ceasing all lifetime mortgage business should leave firms in no doubt that the FSA will hold them to account if they fail to treat their customers fairly."
Minel would have been subject to a £15,000 fine but received a 30% reduction for settling at an early stage of the FSA’s investigation.
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