FSA's ban on dishonest broker upheld

The FSA has banned self-appointed insurance broking director Derek Wright from performing any FSA-regulated functions.

Wright had previously worked as a director in the regulated insurance market, and in 2001 was disciplined by the Lloyd’s Disciplinary Tribunal. Wright thought he was not being fairly remunerated, and dishonestly diverted premiums and client money from his firm for his own use.

As a result he had been permanently banned from all Lloyd’s premises and was permanently suspended from conducting any insurance business at the firm.

From 1997, Wright ran Moorgate Insurance Agencies, a small insurance broker in Romford, Essex, which was authorised by the FSA from 2004 to 2008.

During this time Wright acted as a director of Moorgate, despite never having been approved by the FSA to fulfil the regulated functions associated with the role.

The only person within Moorgate who was approved to do so was Wright’s wife Mary, but she had little to do with the firm on a day-to-day basis.

Wright was responsible for submitting the firm’s Retail Mediation Activities Returns to the FSA, but these indicated that the firm’s capital resources were consistently below the level required by FSA rules, and also contained inaccuracies.

In February 2007, Wright informed the FSA that the firm’s capital resources deficit would be rectified by a further share issue. But while a copy of a Companies House form was submitted to the FSA purporting to show an allocation of shares to Wright, the annual returns submitted by the firm to Companies House later that year showed no new shareholdings.

The following year, the FSA asked Wright to prove that Moorgate’s creditors had been paid, and that debtors’ money had been collected. His response was that another broking firm had taken over responsibility for collection and payment of premiums, a change which had occurred without the FSA’s knowledge or consent.

Following the FSA’s original Decision Notice in March last year, Wright referred the matter to the Upper Tribunal.

In its response the Tribunal found his actions working at Moorgate suggested he had learned little from his experience at Lloyd’s.

The Tribunal found he had misled the FSA over who was carrying out functions at the firm, and that in addition to dishonesty he had a cavalier attitude to regulatory compliance.

Tom Spender, the FSA’s head of retail enforcement, said: “This case graphically illustrates the dishonesty and lack of integrity that some brokers will exercise if it suits their purposes. Wright dishonestly sought to hide his past and rehabilitate himself by posing as someone authorised to carry out regulated functions for Moorgate, when he was not.

“The FSA will continue to take strong action whenever we see this type of conduct.”

View news source : http://www.introducertoday.co.uk/news_features/fsas-ban-on-dishonest-broker-upheld

Bridging loan industry now worth £1bn

The value of the bridging loan industry has broken the £1bn barrier for the first time, driven by buy-to-let investors unable to get funding elsewhere.

West One’s latest quarterly bridging index found that gross lending in the 12 months from March 2011 to March 2012 rose sharply to reach £1.1bn, 21 % higher than in the 12-month period from January 2011 to January 2012.

West One, itself a bridging lender, says the increase is being driven by residential property investors.

With funding costs soaring on the high street, and banks and building societies scaling back their lending, it says that more investors have turned to bridging loans to fund their projects. Bridging lenders are plugging the funding gap left by high-street lenders.

Gross lending in the first quarter of 2012 was £382m, 95% higher than in the first quarter of 2011, and 30% higher than the previous quarter. If the pace of growth continues on its current trajectory, gross lending in 2012 will hit £1.5bn, an increase of 68% from 2011.

The number of loans advanced in Q1 2012 was 74% higher than during the same period last year.

The average loan size rose sharply from £342,000 in the first quarter of 2011 to £412,000 in Q1 2012, an increase of over 20%. This, says West One,  reflects the bigger projects being tackled by property investors.

Duncan Kreeger, chairman of West One Loans, said: “A big funding gap has been created by the problems high street lenders are having with increasing funding costs, increasing capital requirements and heavy exposure to toxic assets.

“As a result, the high street simply can’t cater for the high demand from property investors for residential loans.

“Thankfully for property investors, bridging lenders are stepping in to fill the funding gap.”

He added: “But it’s not just investors who can’t get finance on the high street that use bridging loans. We’ve seen plenty of evidence of investors using bridging loans even when they can access a buy-to-let mortgage on the high street.

“This may be just the start of a more pronounced shift in the way property investors choose to fund their projects. The figures back up that view: with gross lending set to reach over £1.5bn by the end of this year, the bridging is growing at a rapid pace. Property investors see bridging loans as an increasingly legitimate option.”

View news source : http://www.introducertoday.co.uk/news_features/bridging-loan-industry-now-worth-E2A31bn

FTBs' scramble to save 1% Stamp Duty puts their prices up

First-time buyers paid 2.8% more for their homes in March as they tried to make savings of 1% in Stamp Duty.

The Office for National Statistics said that first-time buyers were unique in paying higher prices this March than March of the previous year.

For owner occupiers moving homes, prices decreased by 1.6% over the same period.

The ONS index, one of the Government’s two official house price indices which sits alongside the very different Land Registry survey, said that overall, UK house prices in March this year were 0.4% lower than a year ago.

It said house prices had barely changed since the beginning of 2011, other than in Northern Ireland where there have been big price falls of 10.7%.

Also noticeable in the index is that the price of new homes has shot up by 6.9% in the 12 months to March, while London house prices have slipped by 0.6%. Although a small fall, it is the first move downwards for London property prices since October 2009.

The ONS puts the average house price in the UK during March at £225,283 – considerably above the Land Registry’s price of £160,372 for the same month.

Meanwhile, the NAEA said there were signs of ‘another slowdown’ in the housing market in April.

It said that listings increased per branch by just one, from an average of 61 in March to 62 in April, with an average of seven sales per branch during the month – the same as in March.

Wendy Evans-Scott, NAEA president, said: “Despite sales figures remaining stable, there is little sign of green shoots of growth in the levels of property supply and demand.

“Growth is being held back by continued restrictive lending policies from the major banks and lack of an adequate mechanism to support the first-time buyer market, a situation which will only get worse if mortgage rates rise as predicted.”

* The number of housing transactions in April was down markedly in April.

A total of 72,000 homes across the UK were sold, according to HMRC – down from 88,000 in April, although up on the 70,000 sold in April last year, when the Royal Wedding proved a distraction.

This April’s figure equates to 2,400 sold a day, compared with the long-term average of 3,383, said housing analyst Henry Pryor.

He said properties on the market have just an 8% chance of being sold in the next month, and a 34% chance of being sold within the next year.

View news source : IntroducerToday News

Complaints to Ombudsman rocket 35%

Complaints to the Financial Ombudsman Service about mortgages rocketed by 35% in the last year.

There were 9,537 mortgage-related complaints, compared with 7,067 in the previous year, says the FOS’s annual report covering the 12 months to the end of March.

Of the complaints, 16% were against intermediaries, down from 18% the previous year.

The annual report shows that Payment Protection Insurance is the most complained-about product ever, accounting for 60% of its workload. Altogether, there were 157,716 complaints about PPI.

In total, the FOS had 1,268,798 complaints, with one in five (264,375) escalated to disputes. The number of complaints that turned into disputes was up by 28% over the previous year.

FOS chairman Nicholas Montagu said that media coverage had made large numbers of consumers aware for the first time that they might have been mis-sold PPI policies.

He said: “We received over 150,000 of these cases during the year – the highest number we have ever received in a year about a single financial product. We are still receiving PPI complaints at the rate of over 1,000 new cases every day.”

Sarah Brooks, director of financial services at Consumer Focus, said: “PPI continues to be a thorn in the side of this industry.

“With all that has happened, consumers shouldn’t need to take their PPI claim to the Ombudsman to get their money back. Banks now need to wipe the slate clean by dealing with any claims and compensation payments quickly, efficiently and fairly.”

View news source : http://www.introducertoday.co.uk/news_features/complaints-to-ombudsman-rocket-35http://www.introducertoday.co.uk/news_features/complaints-to-ombudsman-rocket-35

Banking on the move – new app promises change

A new mobile phone app has been developed for banks and building societies which enables customers to use their mobiles to access their accounts and transfer money from one account to another.

The app, from iState Systems, also allows customers to access up-to-date product information and send information and documents.

This means that a client could use the app to complete a mortgage application, for example, answering questions and taking a photo of wage slips or a P60 on their phone to submit it straight away.

It also works for brokers who can submit information on behalf of their clients in the same way.

iState already has its first customer – National Counties Building Society, which is now the first building society in the country to enable their customers to view their accounts and complete transactions using a mobile app.

iState Systems, founded by Barry Yager and Nelson Wootton, has called the product Apprivo, which will be sold to other building societies, banks and financial service companies.

Yager said: “We really believe that Apprivo and mobile phone technology will permanently alter the way that financial institutions do business and the way that they interact with their customers.

“Apprivo enables banks and building societies to provide their customers with new, highly useable, highly competitive services.

“It means customers can now progress a mortgage, loan or savings account at the touch of a button on their mobile phones; intermediaries will have a new instant-access interface; and it reduces the need for documents to be sent in the post, enabling banks and building societies to receive them quicker and more accurately.”

News Source : http://www.introducertoday.co.uk/

Angry advisers hit out at FSA over string of staff departures

An independent wealth management firm has hit out at the FSA, saying that it should be setting a better example.

Addidi Wealth says that high-profile members of the FSA who have left, or are leaving, the regulator should be held to account.

Meanwhile, another leading IFA has separately told the Treasury Select Committee that high-profile members of FSA staff should not simply be allowed to walk away ‘without a care in the world’.

Anna Sofat, managing director of Addidi Wealth, said: “There is a real issue right now around how the FSA calculates the Financial Services Compensation Scheme levies.

“While I agree that those who have received poor advice should be compensated, the way in which the regulator is demanding that IFAs deal with Keydata clients is disproportionate.

“The FSA is insisting that firms which sold Keydata products must go through all their books and compensate individuals, whether the client has complained or not. Keydata products can’t have been bad for everyone or the FSA would never have allowed them to be sold in the first place.

“The FSA is creating the assumption that everyone has been mis-sold and some of these firms which are having to review every single Keydata case could go under, due to the effect that the potential compensation claims will have on their capital adequacy levels.

“As for the interim levy being imposed on IFAs due to the Keydata debacle, Addidi never sold any Keydata products, and yet we have to pay this interim levy at short notice, even though we agreed this year’s budget some time ago.

“We now have to cater for this unexpected extra cost, even though we are not responsible for any of the mis-selling.

“Clearly, the FSA must encourage best practice, but surely a better way to incentivise advisers to be compliant is to make the polluter pay – by charging higher FSCS fees to those firms with a high level of upheld complaints, and lower fees for those with fewer successful complaints.

“Networks have traditionally prevented their members from doing high-risk business in order to keep their compliance costs down, so why can’t the FSA devise a levy system which reflects the practice of individual firms?

“The FSA seems to be living in a bubble, when it should be setting an example to the industry by holding its own personnel to account when things go wrong.

“A large number of high-profile figures have left the regulator recently to take up highly paid jobs elsewhere, thanks to their regulatory experience, but they will never be held to account if things go wrong.

“Fred Goodwin’s pension was cut for poor performance, so why should regulators who are paid by the taxpayer not face similar accountability?”

Separately, PanaceaIFA chief executive Derek Bradley has written to Mark Garnier MP, a member of the Treasury Select Committee, saying that key figures who have left the FSA should be held to account by the committee.

Bradley says: “Given the huge cost involved to the industry and ultimately consumers, the TSC should as a matter of priority call all these key figures before them and get to the truth surrounding the exact reasons behind their departures.

“After all most of them, if not all, have played a very key part in the RDR design and implementation processes. To see them simply walk away without a care in the world before January 1, 2013, is a manifest failure in duty on their part.

“Additionally, it shows a distinct lack of respect for their colleagues, who will be left to carry the can if all goes wrong with the TSC and of course those they regulate.”

Margaret Cole, managing director of the FSA, has already left, while chief executive Hector Sants has announced his departure, as has Peter Smith, former head of investment policy.

Other top-level departures include those of Amanda Bowe, RDR head, managing director of supervision Jon Pain, managing director of risk Sally Dewar, and chief operating officer Mark Norris.

News Source : http://www.introducertoday.co.uk/