The FSA has banned three individuals for mortgage fraud and fined two of them a total of £414,683.
All three flouted the FSA's rules by knowingly submitting false and misleading information to secure the mortgages for themselves and their customers.
The regulator fined Mark Bates of Pace Financial Management in Sheffield £264,683 for knowingly being involved in mortgage fraud during his time as 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 another adviser at Pace, also obtained a mortgage for himself using false payslips and P60s. The broker also submitted a mortgage application for a client using false income and employment information and gave mortgage advice despite his lack of qualifications.
The FSA's investigation also revealed Bates recruited an adviser he knew had been dismissed twice before for gross misconduct. As such, the regulator found Bates wilfully disregarded his obligation to monitor the actions of his staff and effectively allowed the firm to be used for financial crime.
On 18 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.
Meanwhile, Alan Hill of Pace Financial Management, Sheffield 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. This states 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 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 18 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 Pace had no involvement in the misconduct committed by Hill or Bates and co-operated fully with the FSA during its investigations.
Meanwile, a third adviser, Waqarul Hassan Shah of Manchester-based K S Financial Services, based in Manchester, has also been banned from working in regulated financial services for knowingly submitting false income figures on a buy-to-let mortgage for himself and inflating his income six-fold from £11,700 to £65,000.
Shah was also found to have acted recklessly by submitting false and misleading details in a customer's mortgage application.
In addition, the FSA found 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 the penalty would have caused him serious financial hardship.
Margaret Cole, FSA managing director of enforcement and financial crime, says: "Bates, Hill and Shah all showed they were not fit to work in regulated financial services and presented a serious risk to customers and lenders alike with their reckless and unscrupulous actions.
"Mortgage fraud is a crime and we take any failings that put customers or lenders at risk very seriously. The prohibitions will help make the mortgage market a safer place and the fines will send a message to other intermediaries that they must adhere to our rules and act with integrity at all times, or face the consequences."
These three prohibitions bring the number of mortgage brokers banned by the FSA to 96.
Regular reminders and updates
9 December 2019 deadline
Joe McDonnell joins as head of portfolio solutions (EMEA)
Adviser of the Year - South East
Fidelity Multi Asset CIO's outlook