The UK Financial Services Authority has imposed a fine of GBP133,000 on Hadenglen Home Finance, a mortgage broker, for inadequate systems and controls when recommending re-mortgages and payment protection insurance to customers. The authority has also fined Richard Hayes, CEO of Hadenglen, GBP49,000.
The Financial Services Authority (FSA) has found that Hadenglen exposed approximately 2,000 re-mortgage and 1,900 payment protection insurance (PPI) customers to the unacceptably high risk of being sold a product that was not suitable.
Mr Hayes was responsible for the firm’s business practices and for ensuring that its systems and controls for selling re-mortgages and PPI were appropriate. According to the FSA, Mr Hayes implemented a sales strategy for re-mortgages without regard to the risk that customers would have to pay an early redemption charge and other fees when re-mortgaging may have been unsuitable.
Mr Hayes also failed to ensure that the sales practices for PPI were adequate. Hadenglen did not gather sufficient information from customers and did not take into account the cost of PPI when making a recommendation.
As a result, re-mortgage customers incurred significant charges that may not have been in their best interests and PPI customers were advised to purchase a product that may not have been suitable for their needs or under which they were not able to claim.
Margaret Cole, FSA director of enforcement, said: PPI has been a priority for the FSA since general insurance regulation began and it continues to be a priority for us. This is the first time we have taken action against a chief executive for PPI selling failures. The significant fines imposed on both Hadenglen and Mr Hayes reflect the seriousness of their actions.