the financevictims blog

We have moved

2009-03-19T12:26:00.001Z

Later posts are on the finance action blog. Revamped web sites will be following.

FSA bans Bournemouth insurance broker

2008-11-18T11:07:00.001Z

The FSA has banned Peter King and his firm New Forest Mortgage Company Ltd for knowingly submitting applications for fraudulent life assurance policies.

Mr King submitted applications for 39 fraudulent life assurance policies – 30 of which were in the names of applicants whose personal details were either wrong or who knew nothing about the applications – in order to benefit from commission payments of more than £250,000.

Mr King admitted that his plan was to submit the policies, claim the commission and use the money to settle substantial outstanding debts - he is now bankrupt.

Competition Commission proposals on payment protection insurance

2008-11-14T16:52:00.003Z

The Competition Commission is proposing banning the sale of payment protection insurance (PPI) by a distributor to a customer within 14 days of credit being sold, though consumers woul be able to contact the distributor for PPI 24 hours after the sale.

Credit providers will be required to provide a “personal PPI quote”, which will clearly state the cost of the PPI policy individually and when added to the credit product.

Happily, the Competition Commission is also proposing a ban on the sale of single-premium PPI policies, which it says act as a barrier to customers switching and the costs of which are difficult to compare with other PPI policies.

It is inviting feedback on the proposals until December 4 and will publish its final report in January 2009.

The Association of British Insurers has slammed the proposals, saying they will leave millions of consumers unprotected.

They would say that. No one is saying that PPI should be banned. Just that the banks shouldn't have an unfair advantage in selling their very profitable single premium PPI when a loan is taken out.

FSA targets 'phoenix' mortgage firms

2008-11-14T16:51:00.001Z

The FSA has vowed to crack down on mortgage firms that close down and immediately resurrect themselves in an attempt to avoid debts.

FSA fines rise

2008-11-14T16:49:00.000Z

Fines issued by the FSA in the first 10 months of the year totalled £20.5m, up almost four-fold from £5.3m in the corresponding period of 2007.

In October this year alone, the FSA enforced fines totalling £7.2m, much higher than the fines of £5.3m imposed in 2007 as a whole.

FSA fines AWD Chase de Vere Wealth Management Ltd £1.12 million for mis-selling

2008-11-11T12:07:00.002Z

The FSA has fined AWD Chase de Vere Wealth Management Ltd £1.12 million for serious failings in its pension transfer, pension annuity and income withdrawal business that resulted in mis-selling.

The firm mis-sold some pension transfers and pension annuities by recommending products to customers who already had adequate existing pension provisions or whose attitude to risk did not match the products recommended to them. The firm has estimated that as many as 800 of its customers may have received unsuitable advice in relation to 1,200 sales between February 2006 and October 2007.

The FSA also found that the firm sometimes failed to properly disclose the risks and costs of the products it recommended, and was also unable to demonstrate the suitability of its advice from its own records in 39% of the transactions which were reviewed. Based on a sample of recommendations, the FSA found that 28 per cent of transactions resulted in mis-sales.

The Firm is a major independent financial advisory firm and made about 4,300 sales of pension transfers, pension annuities and income withdrawals to approximately 2,800 customers between February 2006 and October 2007.

FSA calls for action on boiler rooms

2008-11-10T16:34:00.002Z

The FSA has called on authorities around the world to help tackle a fraud that brings criminals about £300 million yearly from the UK public.

Each year, around 30,000 people fall victim to boiler rooms in the UK alone – estimates put the total fraud at £300 million. Typically, victims can be ‘groomed’ over weeks or months by fraudsters who call them regularly, eventually persuading them to buy worthless shares.

Boiler rooms are based overseas, often in Spain, Hong Kong or North America. But their victims tend to be in the UK, Germany, United States and Scandinavia.

Anyone who has been cold called by companies offering to sell them shares can report this to the FSA by calling its consumer helpline 0845 606 1234 or by using the online form available on its consumer website www.moneymadeclear.fsa.gov.uk.

Boiler rooms target investors in several ways:

High-pressure cold-calling to offer attractive share opportunities
Selling at inflated prices US 'Regulation S' shares which are banned for sale to US investors;
Recovery room fraud - offering to buy shares, for an upfront commission, back from people who bought their initial shares from a boiler room;
Threatening unspecified 'legal action' and freezing the assets of potential shareholders who decide not to purchase shares, forcing them to go through with the trade.

The FSA says it receives an average 5,000 consumer enquiries a year on boiler rooms.

You can check whether a firm is authorised by the FSA, or if the firm calling is on the list of 500 known unauthorised firms which illegally target investors.

Norwich Union fraudsters jailed

2008-11-02T12:17:00.002Z

Two failed Zimbabwean asylum seekers who were Norwich Union employees have been jailed for five and a half years after stealing customers' personal details and using them to steal hundreds of thousands of pounds from policy holders. They had been working in an area which involved looking at unclaimed assets and had effectively pretended to be policyholders themselves to gain access to the cash.

Customer claims Abbey calltaker hijacked his account

2008-10-30T21:58:00.004Z

The Mail reports Mr Bates' claim that an Indian call centre worker employed by Abbey froze his account and changed his identity as revenge for criticism of the service he'd received.

Mr Bates tells what happened here.

AIG Enhanced Fund Victims Action Group

2008-10-30T11:53:00.001Z

They have a website here.

Beware of 'prize draws'

2008-10-30T08:29:00.003Z

The OFT has warned about a new twist to prize draw scams in which the victims are unwittingly being used to help defraud others.

Consumers received telephone calls out of the blue claiming that they had won an international sweepstake or prize draw worth up to £500,000. The victims were told that in order to claim their winnings they needed to pay 'refundable' taxes and insurance fees and were asked to send payments by money transfer to the scammer in Canada.

The twist came when victims were later informed by the scammer that their prize had arrived at a UK airport but that further sums of money were required for its release. Victims were told to send personal cheques, often for thousands of pounds, to UK 'agents'. These 'agents' turned out to be other victims of the same scam who had been duped into acting as 'money mules', banking the cheques and innocently transferring the money to the scammer overseas. Victims receiving the cheques, who often had exhausted their own life savings, were told by the scammer that the money was from 'sponsors' to help pay the required release fee for their prize. None of the victims received any financial advantage for being 'money mules.

Victims were encouraged by the scammer to borrow large sums of money once their life savings had been depleted and some have lost upwards of £50,000. In one instance, the scammers targeted the widower of a victim who had died.

If you're told out of the blue you've won a prize in a draw you didn't enter, how likely is that to be true?

Don't give them your money.

Standard Life announces bonus cut

2008-10-29T15:42:00.001Z

Standard Life has announced it is cutting final bonuses on its with-profit plans. It will also increase and extend market value reductions.

Most with-profits customers will see a fall in the value of their plan, says the provider.

Former mortgage adviser admits forgery

2008-10-28T14:23:00.003Z

Simon Gray, a former mortgage adviser from Bury St Edmunds, has pleaded guilty to five counts of providing misleading information to the FSA. He also admitted four offences relating to forgery and counterfeiting.

Mr Gray used forged documents when he applied to the regulator for appointed representative status and when he applied to become a director of two mortgage advice firms.

One in 10 home owners could face negative equity

2008-10-28T14:06:00.003Z

One in 10 home owners face the threat of negative equity if house prices fall another 15%, data from the Bank of England reveals.

The Bank of England’s Financial Stability Report shows that 10.64% of home owners will owe more than their home is worth if house prices fall another 15% from the current level.

In the second quarter, possessions rose by 71% compared with Q2 2007. There were 11,054 new cases in Q2, after 9,172 in Q1 2008.

Ombudsman explains changes in new complaint rules

2008-06-27T15:00:00.002+01:00

If a consumer complains to a firm, the firm must still send the consumer an acknowledgement and provide a copy of their complaints-handling process, but the rules now require them to do this ‘promptly’ rather than within a set time of 5 days.

And the rules now require them to keep the consumer informed about the investigation of the complaint, rather than requiring a letter at the 4-week stage.

The rules about responses remain largely the same – though firms can no longer get consumers to settle on the basis of an interim response without telling them about the Financial Ombudsman Service.

And, where responses are required to mention the ombudsman service, this must now be in the letter itself and not just in an enclosed leaflet.

FSA bans three mortgage brokers

2008-06-27T14:08:00.003+01:00

The FSA has banned three east London mortgage brokers for submitting false documents to support mortgage applications.

Muhammad Adnan Ashraf and Muhammad Asim Iqbal, of OCS Property and Financial Services Ltd of Barking, and Mohammed Atif Mayo, of Mac & Mayo Property Services Ltd of Forest Gate, have been banned from regulated business.

Mr Ashraf submitted a mortgage application in his own name with false income details, supported by a copy of a driving licence which the DVLA said it had not issued.

Mortgage applications submitted by Mr Iqbal to lenders were based on false information. Nine sets of applicants’ accounts used in support of customers’ mortgage applications contained identical figures, despite the accounts being for different types of business and apparently being prepared by three different accountants.

Mr Mayo submitted to a lender a mortgage application in his own name that contained false information regarding his income and occupation, supported by false payslips. He also submitted to a lender at least one other mortgage application which contained false income details, which was supported by false financial statements.

Nearly 18,000 Aegon customers face surprise charges

2008-06-18T19:37:00.002+01:00

Thousands of pension policyholders with Aegon UK face unexpected charges following a so-called routine review by the life office found they had been undercharged in the past.

The additional charges, which could be up to 10% of accumulated pensions, followed checks on pensions with reduced or ceased premiums going back as far as six years.

The FSA has given the green light to this retrospective charging and has admitted there is no time limit on such back-dated charging.

More

Stockbroking firm fined £77,000 for weak data security controls

2008-06-18T19:16:00.003+01:00

The FSA has fined Merchant Securities Group Limited for not adequately protecting its customers from the risk of identity fraud. This is the first time the FSA has fined a stockbroking firm for weak data security controls.

Merchant Securities had inadequate procedures for verifying the identities of customers that contacted the firm by telephone. Instead, the firm relied on being able to recognise customers' voices and talking with them informally about personal matters such as holidays or hobbies. Personal account numbers which could be used, with a customer's name, to access account information were included in routine letters.

The FSA said this exposed customers to Identity Theft. Fine: £77,000.

More endwment shortfalls

2008-06-12T13:21:00.003+01:00

Eighty-six per cent of endowment policies sold in the 1980s and 1990s are expected to have a shortfall, a survey suggests.

41% of those expecting a shortfall were contemplating a deficit of as much as 25%.

A further 23% said that they were also expecting to cover half of their mortgage because the endowment policy had fallen far short.

Trusting your mortgage broker

2008-06-11T13:32:00.003+01:00

When you go to a broker for a mortgage, you have to be able to put yourself in their hands, and trust that they will find the best mortgage that you can get.

But the FSA has fined three mortgage brokers for inadequate sales procedures which meant they could not demonstrate that they had recommended affordable mortgage contracts that met their clients’ needs.

The fines were £14,700 for Mohammad Rana, registered as Countrywide Management Consultancy based in Oxford, £11,900 for Peter Scott trading as the Mortgage House in Horsham and Portslade, and £10.500 for Chariot Mortgage Services Limited in Sale.

The FSA said all three mortgage brokers failed to gather adequate customer information, including personal and financial information, to demonstrate the suitability of their advice.

This is absolutely crucial to finding the best product for the client!

Chariot also held itself out as sourcing contracts from the whole of the market, which in practice was not the case. So clients weren't getting the service they expected.

You have to be able to trust your mortgage broker. Clearly that wasn't the case here.

Mortgage adviser pleads guilty to fraud

2008-06-11T12:19:00.003+01:00

Gordon Benville, a mortgage adviser from Deal in Kent, has pleaded guilty to 16 fraud offences.

The FSA said he would allegedly ask clients to sign incomplete remortgage applications, telling them he would complete the forms for them as he had all the necessary information. Then he would enter false information, such as the applicants' salaries and occupation, according to the FSA.

In each case, a higher loan figure for the customer was entered than the one required by the client. He then told the client there had been a mistake and they should give him a cheque to return the balance to the lender.

Thinc group fined over sub-prime mortgages

2008-06-11T10:07:00.006+01:00

The FSA last month fined Thinc Group £900,000 for not having adequate risk management and compliance systems for its sub prime mortgage business, and for failing to take reasonable care to ensure that it had records to prove that advice it gave to customers in relation to the sale of sub prime mortgages was suitable.

The FSA said that between 1 January 2006 and 30 September 2007 Thinc failed to obtain adequate financial information about some of its sub prime mortgage customers before giving advice; failed to demonstrate that those customers' credit histories merited the sale of a sub prime mortgage; failed to demonstrate why the particular sub prime mortgage products that it recommended matched those customers' needs and circumstances; failed to demonstrate that it had considered the affordability of the sub prime mortgage contracts that it recommended to those customers; and provided some of those customers with a 'Record of Suitability' letter that did not correspond to the product advised or taken.

In other words, customers of Thinc may easily have been sold a mortgage that was more expensive than they needed.

During that period Thinc acted as broker in the sale of 775 regulated sub prime mortgage contracts representing total consumer borrowings of £76.9m. These mortgage sales generated revenue for the firm of approximately £0.7 million. So the FSA's fine more than wiped out Thinc's profits from these sales.

How much more money did Thinc make from its customers? During that period it also brokered 18,015 regulated mortgage contracts, representing total consumer borrowings of £2,706 million. These mortgage sales generated revenue for Thinc of almost £36 million during the relevant period.

Lincoln IFA charged

2008-06-10T11:21:00.003+01:00

Alan Richardson, a former independent financial adviser (IFA) who ran Lincoln-based MFC Finance Ltd, has been charged with fraudulent trading, false accounting, evasion of a liability and perverting the course of justice.

His company is accused of borrowing money from a large number of private investors, promising high rates of interest and a safe return of capital. However, the company collapsed in December 2003 with eventual liabilities of over £2m, leaving many investors with large financial losses.

Insurance comparison websites

2008-05-09T14:42:00.003+01:00

The FSA has been reviewing insurance comparison websites. It wants to be sure that they are all clear and fair.

They say the overriding principle for firms to comply with is that the information provided to consumers must be clear, fair and not misleading. In particular:

Where an insurance comparison site uses assumptions to generate quotes, we expect any assumptions made to be reasonable, and clearly highlighted to consumers;

Sites comparing a limited number of features, and in particular where comparison is only on the basis of price, should explain to consumers in a clear and timely way that the products being compared may have different features, and that features, other than price, should be taken into account before purchasing a policy;

Firms should have processes in place to ensure that all information provided is correct and updated on a regular basis. This includes an expectation that firms will have systems and controls in place to ensure that the information provided by consumers is correctly relayed to the broker or insurer.

Firms should take a consistent approach to the provision of information, and the basis for providing certain pieces of information should be clearly explained to the consumer;

Firms should not give a misleading impression of their market coverage.

One good idea is to shop around the comparison sites! And not all big insurers will necessarily paticipare in all of them.

Repossession orders rising

2008-05-09T14:37:00.002+01:00

The number of orders made by the courts in England and Wales at an early stage of the repossession process rose 17% in the first quarter of 2008 compared with the same period of 2007, from 2,438 to 27,530.

The repossession figures for the first half of 2008 will be published in August. The Council of Mortgage Lenders predicts that there will be 45,000 repossessions in 2008, up from 27,100 in the previous year. This compares with 11.8 million outstanding mortgages in the UK.

The government says there will be more free legal advice for those at risk of repossession, along with specialist training for debt advice agencies.