The Financial Services Authority (FSA) has fined a Scottish mortgage firm £17,500 for rule breaches including cold calling potential customers. This is the first time it has taken action against a firm for cold calling.
An FSA investigation found that 85% of the business of Glasgow-based Capital Mortgage Connections Ltd was generated by cold calling potential customers.
The fine also includes Capital's failure to treat its customers fairly by being unable to demonstrate that it gave appropriate pricing information on the accident, sickness and unemployment (ASU) insurance polices it sold.
Over 97% of ASU insurance polices sold by the firm were on a single premium basis. Capital was unable to demonstrate that it advised its customers of the potentially cheaper monthly option and gave suitable pricing information to them.
"Cold calling potential customers for mortgage business is against our rules and firms operating in the industry should be aware of this," said Jonathan Phelan, head of retail enforcement at the FSA. "Management is responsible for ensuring that firms comply with our rules and we will act where we find breaches."
The regulator has instructed CMC to carry out a past business review to all existing single premium ASU insurance policy customers to ensure they are fully aware of the benefits, cost alternatives, terms and conditions of the product they have and the reasons why they were recommended the single premium plan.
By agreeing to settle at an early stage of the FSA investigation the firm qualified for a 30% discount under the FSA’s Executive Settlement Scheme.