Chepstow mortgage broker fined £10,500 for self-certification breaches

Chepstow Financial Services, the trading name for a small mortgage broker run by Andrew Jeffreys, has paid a £10,500 penalty for failings around sales of self-certification mortgages. In the period 31 October 2004 to 12 September 2007, the firm advised on 409 loans but during a visit by the FSA Small Firms Division in 2007 it became apparent that insufficient personal and financial information had been collected on clients to assess affordability, in one case when the mortgage term extended past retirement age. Records demonstrating suitability and the reasons for recommendations were also deficient in breach of Principle 9. The paperwork did not elucidate why employed applicants had self-certified their incomes. Sometimes several Key Facts Illustrations (KFIs) were found in the same client file with no comment on which product had been selected. In three of the 20 files checked by the FSA, the KFI was issued after completion of the mortgage contract. When packagers were used to source products, the extra fee incurred was not clearly presented (Principle 7 – clear, fair and not misleading communication to customers). The Final Notice also observes that the record-keeping systems did not enable the firm to pick up inconsistencies in client files that might have indicated attempts to defraud lenders (Principle 3 – adequate risk management systems). Although staff informally discussed cases, reviewed each other’s files for compliance and attended appropriate courses, these activities were not covered by formal procedures or documentary evidence.