The Minel Group, a buy-to-let mortgage provider, has been fined £10,500 by City watchdog the Financial Services Authority (FSA) for exposing consumers to the risk of being sold an unsuitable equity-release loan.
In addition, the Newcastle-based firm has been told to review its sales of lifetime mortgages from 9 November 2004 to 9 December 2005 – to compensate customers for any loss caused by unsuitable advice – and has agreed to stop selling lifetime loans.
This is the first time the FSA has taken enforcement action against a lifetime mortgage adviser.
The FSA discovered "persistent record-keeping failures" and "systems and controls deficiencies" during visits to the firm as part of its general work on equity-release advice.
It found that Minel had insufficient procedures for controlling its lifetime mortgage business and the quality of advice, and that it had failed to record enough details about customers' circumstances to establish their needs and objectives.
It also found that despite lifetime loans being a higher-risk product, Minel did not have any specific training and competence procedures for staff.
"We remain concerned about higher-risk products like lifetime mortgages," said Georgina Philippou, head of retail enforcement at the FSA.
As Minel agreed to settle at an early stage of the FSA's investigation, it qualified for a 30 per cent discount on the fine.Reuse content