An investigation by the regulator revealed that 85 per cent of CMC’s business was generated as a result of cold-calling, with CMC the first firm to have action taken against it for failing to adhere to the cold-calling guidelines.
Jonathan Phelan, head of retail enforcement at the FSA, said: “Cold-calling potential customers for mortgage business is against our rules and firms operating in the industry should be aware of this. This is the first time we have taken steps against a firm for undertaking this activity and we will continue to monitor the market for instances of cold-calling.”
The report by the FSA also revealed that CMC had failed to treat its customers fairly and was unable to establish and maintain appropriate systems and controls. It also failed to demonstrate appropriate pricing of the accident sickness and unemployment (ASU) cover it sold.
Phelan added: “Firms must be able to demonstrate their reasons for recommending a particular policy and we expect firms to have systems and controls in place to monitor their businesses. The sale of payment protection insurance, of which ASU is a type, is a priority for the FSA due to the potential level of risk to consumers. We take this very seriously.”
Michael Curran, a mortgage adviser, urged the FSA to take a harder line against those flouting the rules. He said: “Until the FSA starts making an example of some of these firms and withdrawing the authorisation of any firm found to have cold called themselves or to have regularly used leads generated by cold calling, it will continue.”
