Financier Moser and mortgage firm fined by FSA

CHESHIRE Mortgage Corporation, a subsidiary of finance company Jerrold Holdings, and two directors including chief executive Henry Moser, have been fined by the Financial Services Authority for a ‘lacklustre approach to regulation’.

Mr Moser has been fined £70,000 personally and has agreed to step down from his role at CMC within three to six months. The company has been fined more than £1m and must now compensate more than 2,000 customers.

In a statement the FSA said the company had been fined £1.22m for failing to treat customers fairly in the sale of mortgages and arrears handling from October 2004 to the end of 2009.

Andrew Lawton, the firm’s compliance director, has been fined £13,500 and banned from holding a “significant influence function”.

The FSA has also required CMCL to carry out a redress exercise that could see approximately £2m paid to around 2,000 affected customers.

CMCL specialised in lending to customers with poor credit histories. The FSA found that CMCL 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.

The regulator said Mr  Moser has been disciplined for failing to spot these problems and put them right.

The FSA said: “CMCL overcharged some customers in arrears and applied arrears charges inconsistently and unfairly.  Customers were also sometimes notified of charges after they had been incurred.”

The FSA also found that when CMCL transferred customers in arrears to Monarch Recoveries for debt recovery, they were charged £150 despite it being an in-house company.

In addition the lender did not always make a reasonable effort to reach an agreement with customers in arrears over method of payment; and it did not always properly assess the affordability of mortgages by, for example, challenging a customer’s declared income.

Tracey McDermott, director of enforcement and financial crime at the FSA  said:“CMCL’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.
 
“The failings of Moser, Lawton and CMCL were serious and let down a vulnerable group of consumers. Where firms and individuals fail to comply with our rules and treat customers fairly they should expect to be held to account.”

The FSA said the parties had settled at an early stage of the investigation so qualified for a 30% discount, without which the fines would have been £1.75 million and £100,000 respectively.

Mr 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 Cheshire Mortgage Corporation said the issues “pre-date a comprehensive review of the firm’s procedures and corporate governance standards and relate to a period of time up to the end of 2009”.

It added: “We sincerely apologise to any customers that may have been affected and have been actively contacting those customers to ensure that matters are appropriately addressed in a timely manner.

“We are pleased to have reached resolution with FSA on these matters and look forward to continuing to focus our attention on delivering high standards of service to our customers.”

The Cheadle-based company added: The company added: “Since 2008 we have made significant changes to our policies to ensure that they comprehensively adhere to regulatory and market standards and have received independent assurance that this is the case.

“In addition we have also introduced a robust governance structure aligned to current best practice while making a number of senior appointments to further strengthen the management team.”

With regard to veteran financier Mr Moser, the company stressed he had “fully cooperated” with the investigation and has accepted its findings.

While he will be moving to a non-executive role in CMCL, he will continues as chief executive of the overall group, Jerrold Holdings.