Mortgage broker fined £900,000 for sub-prime sales

A large firm of financial advisers has been fined £900,000 by the financial regulator for the way it sold sub-prime mortgages to its customers.

The Financial Services Authority (FSA) fined the Thinc Group and two of its associated companies for failing to keep records to prove that the sub-prime mortgages sold to customers were suitable.

The Thinc Group – a network of IFAs selling a range of financial products including mortgages - is accused of failing to collect adequate information on its clients before selling them sub-prime mortgages, and for being unable to prove whether a sub-prime mortgage was suitable for these customers.

It was also unable to demonstrate to the FSA whether customers were sub-prime or not, whether they could afford a sub-prime mortgage and why particular products had been recommended.

Although there is no evidence sub-prime mortgages were mis-sold to customers, the FSA warns that the firm’s failing could have had an “adverse effect” on customers concerned.

The failings were found to have taken place between 1 January 2006 and 30 September 2007. During this period, the Thinc Group sold 18,015 mortgages, of which 775 were sub-prime, worth a collective £2,706 million.

John Simmonds, chief executive of Thinc, says, “We sincerely regret the shortcomings that have been identified with regard to record keeping processes relating to a small number of sub-prime mortgages.”

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