3 brokerage directors receive FSA fine and ban
17 December 2012
The FSA has banned and fined the former directors of a mortgage brokerage for numerous failings in relation to the sale of mortgages and payment protection insurance (PPI).
Christopher Ollerenshaw, Thomas Reeh and Adrian Childs, all former directors of mortgage and loan brokerage Black and White Group Limited, had action taken against them by the regulator following an unsuccessful appeal against the FSA's decision in an Upper Tribunal.
Though Ollerenshaw and Reeh, Chairman and Chief Executive of Black and White, appealed the FSA's ruling, the Tribunal agreed with the regulator that fines should be imposed against the pair of £100,000 and £75,000 respectively.
Ollerenshaw's fine was reduced to £50,000 and Reeh's to £10,000, however, after considerations were made for financial hardship.
The FSA also asked for both individuals to be banned; the Tribunal maintained a ban for Ollerenshaw but decided against the sanction for Reeh, in light of mitigating circumstances.
Adrian Childs, former Chief Operating Officer at the firm, has also been banned from holding a senior position in regulated financial services as he did not understand, or take steps to understand, how to perform his role.
He would also have been fined £50,000 but was declared bankrupt in 2009.
Black and White primarily advised on and arranged sub-prime mortgage contracts, purporting to refer to a panel of over 20 mortgage lenders.
An investigation found, however, that Ollerenshaw and Reeh encouraged sales advisers to sell a particular lender's mortgages without considering whether the products were suitable for customers.
In addition, Black and White had a £1 million loan facility from the lender in question and, when the firm had difficulty repaying the sum, offset outstanding repayments against commissions due from the lender.
It was also found that undue pressure was placed on Black and White advisers to sell PPI to its customers.
The FSA reported that Reeh had imposed targets for sales without proper regard to the product's suitability for consumers, driven by an incentive scheme which provided a greater commission for selling single premium rather than regular premium policies.
Tracey McDermott, the FSA's director of enforcement and financial crime, said:
"The failings of Ollerenshaw, Reeh and Childs are serious. The way in which they ran B&W led to customers being treated unfairly. Both the incentive scheme and the culture at the firm encouraged staff to focus on sales rather than suitability.
Tracey added: "We expect firms to put customers at the heart of their business. Getting sales incentives right is critical to that. Firms that fail to do so can expect us to take action against them."