Fraudulent mortgage brokers banned

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 mortgages for themselves and their customers.

Mark Bates of Pace Financial Management, Sheffield, was fined £264,683 for mortgage fraud while he was 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 an adviser at Pace, also obtained a mortgage for himself using false payslips and P60s. He also submitted a mortgage application for a client using false income and employment information. Bates also gave mortgage advice, despite not being qualified.

The FSA’s investigation revealed that Bates had recruited an adviser he knew had been dismissed twice before for gross misconduct. In this way, Bates effectively allowed the firm to be used for financial crime.

In February, 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 was sentenced to four years’ imprisonment.

Alan Hill, also of Pace, was fined £150,000 and banned from working in the financial services industry. He admitted manufacturing false documentation and then using this to apply for mortgages for at least six customers.

Hill also admitted creating false documentation that 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.

In  February this year, 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 that Pace had no involvement in the misconduct committed by Hill or Bates and cooperated fully with the FSA during its investigations.

In a separate case, Waqarul Hassan Shah, a partner in KS Financial Services, Manchester, has been banned from working in regulated financial services for knowingly submitting false income figures on a buy-to-let mortgage for himself, inflating his income six-fold from £11,700 to £65,000.

He also submitted false and misleading details in a customer’s mortgage application.

The FSA would have fined Shah £40,000 had it not been for evidence that the penalty would have caused him serious financial hardship.

These three latest prohibitions bring the number of mortgage brokers banned by the FSA to 96.