The FSA has fined Cheshire Mortgage Corporation and two of its directors. It has also ordered over 2,000 customers who were over-charged for arrears to be compensated at a probable cost of £2m.
The Manchester-based firm, a division of Blemain Group, has been hit with a £1.225m fine for failing to treat customers fairly in the sale of mortgages and arrears handling from October 2004 to the end of 2009.
On top of this, the CEO, Henry Moser, has been fined £70,000. He has also agreed to step down from his role within three to six months. Andrew Lawton, the firm’s compliance director, has been fined £13,500 and banned from holding a significant influence function.
The firm operated in niche markets, including lending to customers with poor credit histories. The FSA found that CMC failed to treat some of its customers fairly when they fell into arrears, was unable to always demonstrate that mortgages it sold were affordable, and did not always communicate regularly or fully with its customers.
It overcharged some customers in arrears and applied arrears charges inconsistently and unfairly. Customers were also sometimes notified of charges after they had been incurred. Nor had the firm properly assessed some mortgages for affordability, failing to challenge customers’ declared incomes.
The FSA said that Moser as CEO was ultimately responsible for the actions and compliance of the firm, but failed to ensure the firm was being properly managed so that problems would be identified and remedied.
Lawton was aware of certain poor practices taking place at the firm but failed to put them right and demonstrated a lack of competence and capability in his role as a compliance director.
Tracey McDermott, FSA director of enforcement and financial crime, said: “CMC’s lacklustre approach to regulation, combined with very poor practices in collecting arrears, meant that some customers already worried about being able to pay back their mortgages were put under undue pressure and sometimes ended up paying more than they should.”
Cheshire Mortgage Corporation and Moser both settled at an early stage of the investigation so qualified for a 30% discount, without which the fines would have been £1.75m and £100,000 respectively. Lawton settled at a later stage of the investigation and qualified for a 10% discount, without which he would have been fined £15,000.
In a statement on its website, Cheshire Mortgage Corporation says the FSA’s action relates to historic issues, and it apologises to affected customers.
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