The CEO of CMCL, Henry Moser, has been fined £70,000 and agreed to step down from his role within three to six months. Andrew Lawton, the firm's compliance director, has been fined £13,500 and banned from holding a significant influence function.
The FSA has also required CMCL to carry out a redress exercise that could see approximately £2 million paid to around 2,000 affected customers.
CMCL operated in niche markets, including lending to customers with poor credit histories. The FSA found that CMCL failed to treat some of its customers fairly when they fell into arrears, was unable to always demonstrate that mortgages it sold were affordable, and did not always communicate regularly or fully with its customers. Moser has been disciplined for failing to spot these problems and put them right.
CMCL overcharged some customers in arrears and applied arrears charges inconsistently and unfairly. Customers were also sometimes notified of charges after they had been incurred.
The FSA also found that:
-when CMCL transferred customers in arrears to Monarch Recoveries for debt recovery, they were charged £150 despite it being an in-house company;
-CMCL did not always make a reasonable effort to reach an agreement with customers in arrears over method of payment; and
-CMCL did not always properly assess the affordability of mortgages by, for example, challenging a customer's declared income.
Moser, as CEO, was ultimately responsible for the actions and compliance of the firm, however he failed to ensure the firm was being properly managed so that problems would be identified and remedied. Lawton was aware of certain poor practices taking place at the firm but failed to put them right and demonstrated a lack of competence and capability in his role as a compliance director.
Tracey McDermott, director of enforcement and financial crime, said:
"CMCL's lacklustre approach to regulation, combined with very poor practices in collecting arrears, meant that some customers already worried about being able to pay back their mortgages were put under undue pressure and sometimes ended up paying more than they should.
The failings of Moser, Lawton and CMCL were serious and let down a vulnerable group of consumers. Where firms and individuals fail to comply with our rules and treat customers fairly they should expect to be held to account."
CMCL and Moser both settled at an early stage of the investigation so qualified for a 30% discount, without which the fines would have been £1.75 million and £100,000 respectively. Lawton settled at a later stage of the investigation and qualified for a 10% discount, without which he would have been fined £15,000.
Statement From Cheshire Mortgage Corporation Limited
"Cheshire Mortgage Corporation Limited (CMCL) announces that it has reached agreement with the Financial Services Authority (FSA) in relation to a number of historical issues. Such issues pre-date a comprehensive review of the firm’s procedures and corporate governance standards and relate to a period of time up to the end of 2009.
The FSA has acknowledged that the firm, CEO and fellow directors have worked proactively with the Regulator to bring this matter to a conclusion. CMCL is the sixth firm to reach a resolution with the FSA for similar matters.
Since 2008 we have made significant changes to our policies to ensure that they comprehensively adhere to regulatory and market standards and have received independent assurance that this is the case. In addition we have also introduced a robust governance structure aligned to current best practice while making a number of senior appointments to further strengthen the management team.
We are pleased that the FSA recognised that the matters identified “…have been mitigated to a considerable extent by....positive wide-ranging changes to the organisational, governance and compliance arrangements at CMCL to achieve high regulatory standards and ensure that customers are treated fairly”.
CMCL’s CEO, Henry Moser, fully cooperated with the FSA investigation and has accepted its findings. The FSA recognised his personal commitment over the past four years to CMCL’s process of improvement.
Having led the company through this period, Mr Moser now has decided, with the support of the Board, to step down as CEO of CMCL within the next three to six months. He will take up the position of non executive director, where he will continue to help drive organisational change, ensuring that high regulatory standards continue to be maintained. Henry Moser continues as Chief Executive of the overall Group where his leadership, experience and expertise will focus on further developing the business.
We sincerely apologise to any customers that may have been affected and have been actively contacting those customers to ensure that matters are appropriately addressed in a timely manner. We are pleased to have reached resolution with FSA on these matters and look forward to continuing to focus our attention on delivering high standards of service to our customers."
