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FSA bans three fraudulent mortgage brokers and imposes fines totalling more than £400,000
Margaret Cole
Mortgage fraud is a crime and we take any failings that put customers or lenders at risk very seriously
FSA/PN/154/2010
12 October 2010
The Financial Services Authority (FSA) has banned three individuals for mortgage fraud and fined two of them a total of £414,683.
All three flouted the FSA’s rules by knowingly submitting false and misleading information to secure the mortgages for themselves and their customers.
Mark Bates of Pace Financial Management, Sheffield
The FSA has fined Bates £264,683 for knowingly being involved in mortgage fraud whilst he was a partner at Pace. He has also been banned from working in regulated financial services.
The fine includes a disgorgement of the £74,683 profit he made by diverting commission to himself and a colleague which should have been paid to Pace.
Bates, in conjunction with an adviser at Pace, also obtained a mortgage for himself using false payslips and P60s. Similarly, he submitted a mortgage application for a client also using false income and employment information. Bates also gave mortgage advice despite not being qualified.
The FSA’s investigation also revealed that Bates had recruited an adviser that he knew had been dismissed twice before for gross misconduct. In this way, Bates wilfully disregarded his obligation to monitor the actions of his staff and effectively allowed the firm to be used for financial crime.
On 18th February 2010, in a case brought by South Yorkshire Police, Bates was found guilty of three offences relating to conspiracy to defraud, money laundering and conspiracy to obtain a money transfer by deception and sentenced to four years imprisonment.
Alan Hill of Pace Financial Management, Sheffield
Hill has been fined £150,000 and banned from working in the financial services industry for his misconduct which resulted in Pace committing a breach of Principle 1 of the FSA’s Principles of Business. Principle 1 states that a firm must conduct its business with integrity.
During the FSA’s investigation Hill admitted to manufacturing false documentation then using this to apply for mortgages, fraudulently, for at least six customers.
Hill also admitted to creating false documentation that he knew would be used for mortgage fraud by a third party. In two cases Hill was paid by a third party for doing this.
In March 2009, in a case brought by South Yorkshire Police, Hill pleaded guilty to nine offences of conspiracy to obtain a money transfer by deception, obtaining a money transfer by deception and making false instruments.
On 18th February 2010 Hill was convicted of five further offences to which he previously pleaded not guilty, all of which were related to financial crime. Hill was sentenced to five and a half years imprisonment.
The FSA found that Pace had no involvement in the misconduct committed by Hill or Bates and co-operated fully with the FSA during its investigations.
Waqarul Hassan Shah of K S Financial Services, Manchester
Shah has been banned from working in regulated financial services for knowingly submitting false income figures on a buy-to-let mortgage for himself, inflating his income six-fold from £11,700 to £65,000.
Shah, who was a partner at Manchester-based K S Financial Services, was also found to have acted recklessly by submitting false and misleading details in a customer’s mortgage application.
In addition, the FSA found that Shah failed to put in place adequate systems and controls to prevent false and misleading mortgage applications being submitted to lenders and to ensure customer files were checked.
The FSA would have fined Shah £40,000 had it not been for evidence that the penalty would have caused him serious financial hardship.
Margaret Cole, the FSA’s managing director of enforcement and financial crime, said:
“Bates, Hill and Shah all showed they were not fit to work in regulated financial services and presented a serious risk to customers and lenders alike with their reckless and unscrupulous actions.
“Mortgage fraud is a crime and we take any failings that put customers or lenders at risk very seriously. The prohibitions will help make the mortgage market a safer place and the fines will send a message to other intermediaries that they must adhere to our rules and act with integrity at all times, or face the consequences.”
These three prohibitions bring the number of mortgage brokers banned by the FSA to 96.
Notes to editors
Margaret Cole
Mortgage fraud is a crime and we take any failings that put customers or lenders at risk very seriouslyFSA/PN/154/2010
12 October 2010
The Financial Services Authority (FSA) has banned three individuals for mortgage fraud and fined two of them a total of £414,683.
All three flouted the FSA’s rules by knowingly submitting false and misleading information to secure the mortgages for themselves and their customers.
Mark Bates of Pace Financial Management, Sheffield
The FSA has fined Bates £264,683 for knowingly being involved in mortgage fraud whilst he was a partner at Pace. He has also been banned from working in regulated financial services.
The fine includes a disgorgement of the £74,683 profit he made by diverting commission to himself and a colleague which should have been paid to Pace.
Bates, in conjunction with an adviser at Pace, also obtained a mortgage for himself using false payslips and P60s. Similarly, he submitted a mortgage application for a client also using false income and employment information. Bates also gave mortgage advice despite not being qualified.
The FSA’s investigation also revealed that Bates had recruited an adviser that he knew had been dismissed twice before for gross misconduct. In this way, Bates wilfully disregarded his obligation to monitor the actions of his staff and effectively allowed the firm to be used for financial crime.
On 18th February 2010, in a case brought by South Yorkshire Police, Bates was found guilty of three offences relating to conspiracy to defraud, money laundering and conspiracy to obtain a money transfer by deception and sentenced to four years imprisonment.
Alan Hill of Pace Financial Management, Sheffield
Hill has been fined £150,000 and banned from working in the financial services industry for his misconduct which resulted in Pace committing a breach of Principle 1 of the FSA’s Principles of Business. Principle 1 states that a firm must conduct its business with integrity.
During the FSA’s investigation Hill admitted to manufacturing false documentation then using this to apply for mortgages, fraudulently, for at least six customers.
Hill also admitted to creating false documentation that he knew would be used for mortgage fraud by a third party. In two cases Hill was paid by a third party for doing this.
In March 2009, in a case brought by South Yorkshire Police, Hill pleaded guilty to nine offences of conspiracy to obtain a money transfer by deception, obtaining a money transfer by deception and making false instruments.
On 18th February 2010 Hill was convicted of five further offences to which he previously pleaded not guilty, all of which were related to financial crime. Hill was sentenced to five and a half years imprisonment.
The FSA found that Pace had no involvement in the misconduct committed by Hill or Bates and co-operated fully with the FSA during its investigations.
Waqarul Hassan Shah of K S Financial Services, Manchester
Shah has been banned from working in regulated financial services for knowingly submitting false income figures on a buy-to-let mortgage for himself, inflating his income six-fold from £11,700 to £65,000.
Shah, who was a partner at Manchester-based K S Financial Services, was also found to have acted recklessly by submitting false and misleading details in a customer’s mortgage application.
In addition, the FSA found that Shah failed to put in place adequate systems and controls to prevent false and misleading mortgage applications being submitted to lenders and to ensure customer files were checked.
The FSA would have fined Shah £40,000 had it not been for evidence that the penalty would have caused him serious financial hardship.
Margaret Cole, the FSA’s managing director of enforcement and financial crime, said:
“Bates, Hill and Shah all showed they were not fit to work in regulated financial services and presented a serious risk to customers and lenders alike with their reckless and unscrupulous actions.
“Mortgage fraud is a crime and we take any failings that put customers or lenders at risk very seriously. The prohibitions will help make the mortgage market a safer place and the fines will send a message to other intermediaries that they must adhere to our rules and act with integrity at all times, or face the consequences.”
These three prohibitions bring the number of mortgage brokers banned by the FSA to 96.
Notes to editors
- The Final Notices for Hill, Bates and Shah.
- All three cases were referred to enforcement following work conducted by the FSA’s Small Firms and Contact Division. In particular, Shah’s failings were identified through the FSA’s assessment programme for small firms. Details of the small firms’ assessment programme and consumer-focussed agenda are available on a dedicated section of the FSA website for the regulation of smaller firms.
- The FSA worked closely with South Yorkshire Police during its investigation of Bates and Hill and their criminal trials and prosecutions.
- The FSA regulates the financial services industry and has five objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
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