As the only approved person at the firm, it was Ogburu’s responsibility to implement adequate systems and controls to properly monitor staff and prevent mortgage fraud. However, the FSA investigation found that advisers at the firm were able to submit false and misleading mortgage applications to lenders using Ogboru’s log-in details, without her prior knowledge. In fact, an employee was still using her log-in details five months after his employment was terminated at JN Finance.
Ogboru admitted incompetence in running her firm and had considered reducing JN Finance’s permissions so that it could no longer arrange mortgages. However, she continued to run the business in the same irresponsible way, despite obvious warning signs that JN Finance was being used to commit mortgage fraud.
As sole director and approved person at his Dundee-based mortgage and general insurance firm, Winton had ultimate responsibility for managing and monitoring his firm’s business. However, he ran a separate business from different premises, and delegated day-to-day responsibility of Mortgage Healthcare Limited to two non-approved advisers. A previous FSA visit to the firm identified concerns at the level of interest only mortgages and self certification of income in files. During a further visit, the FSA found no evidence that Winton had taken any action to rectify the problems.
When interviewed by the FSA, Winton expressed concern that 65% of the firm’s business was interest only mortgages, but stated he had no control over this. He also admitted that advisers were still failing to check the feasibility of customers’ repayment strategies for interest only sales. The FSA identified 14 out of 19 cases in which it appears that customers submitted mortgage applications to lenders which contained false or misleading information about their incomes. Furthermore, the FSA found problems with the suitability of advice given to customers and inadequate complaints handling procedures. Mortgage Healthcare Limited, Winton’s firm, has had its permissions removed and ceased trading.
Margaret Cole, director of enforcement and financial crime at the FSA said:
"FSA rules ensure that financial services firms operate safely, protecting both their customers and the industry itself. Anyone found flouting those rules will face stiff penalties.
"Ogboru and Winton were not of sufficient calibre to run their firms to the standards expected by the FSA, and as such have either been removed from the industry or prevented from holding senior positions."
Ogboru has been banned from the industry, and would have been fined £65,000 had it not been for evidence that the fine would have caused serious financial hardship. Winton was fined £31,500 and will not be able to hold senior positions in the financial services industry for two years.
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