Hadenglen Home Finance plc has been fined £133,000 while chief executive, Richard Hayes, has been fined £49,000 for inadequate systems and controls when recommending remortgages and payment protection insurance (PPI). This is the first time the FSA has fined a firm and its chief executive for remortgage and PPI failings.
The FSA found that the firm exposed approximately 2,000 remortgage and 1,900 PPI customers to the unacceptably high risk of being sold a product which was not suitable. It claimed that Hayes was responsible for the firm’s business practices and for ensuring that its systems and controls for selling remortgages and PPI were appropriate. He implemented a sales strategy for remortgages without regard to the risk that customers would have to pay an early redemption charge and other fees when remortgaging may have been unsuitable.
As a result, remortgage customers incurred charges and PPI customers were advised to purchase a product that may not have been suitable for their needs. There were also serious weaknesses in Hadenglen’s compliance monitoring, training and competence, use of management information and senior management oversight of the business.
Margaret Cole, FSA director of enforcement, said: “Firms must develop and maintain systems and controls that minimise the risk of providing unsuitable advice to customers. This is the first time we have taken action against a chief executive for PPI selling failures. The significant fines imposed reflect the seriousness of their actions.”
Simon Burgess, managing director of British Insurance, said: “The regulator has bared its teeth and it’s a shame that the fine is not more. It should be kicked out of the industry.”
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