The Financial Services Authority has fined Thinc Group £900,000 for risk management and compliance failures relating to the sale of sub-prime. The regulator says the firm did not have adequate risk management and compliance systems for its sub-prime mortgage business. It says Thinc Group failed 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 found that between January 1 2006 and September 30 2007 the firm failed to obtain adequate financial information about some of its sub-prime
mortgage customers before giving advice.
It failed to demonstrate that those customers' credit histories merited the sale of a sub prime mortgage and demonstrate why the particular sub prime mortgage products that it recommended matched those customers' needs and circumstances.
It also failed to demonstrate that it had considered the affordability of the sub-prime mortgage contracts that it recommended to those customer, providing customers with a 'Record of Suitability' letter that did not correspond to the product advised or taken.
Margaret Cole, director of enforcement at the FSA, says: "This case demonstrates the importance of firms being able to prove to themselves and to the FSA, through proper records, that they are treating their customers fairly by doing everything necessary to make sure that they get suitable advice.
"The level of fine shows that we are determined to impose higher fines for serious failings in the retail market and that poor record keeping is a serious failing even where, as in this case, the FSA has not determined that the firm mis-sold sub-prime mortgages and there have been few complaints."
John Simmonds, chief executive of Thinc, says: "We sincerely regret the shortcomings that have been identified with regard to record keeping processes relating to a small number of sub-prime mortgages.
We are continuing a comprehensive review of our systems to ensure that these are improved." He adds: "While I believe that the industry as a whole faces the challenge of raising standards, Thinc is a strong company and is well placed to achieve this.”
