The Financial Conduct Authority has secured a High Court order of £4mn against an unauthorised mortgage broker and its associates who “exploited” vulnerable customers.
The order was issued against London Property Investments (U.K) Limited and NPI Holdings Limited which the FCA accused of arranging mortgages and buying properties and renting them back to sellers both without authorisation from the authority.
Daniel Stevens, the director of LPI and NPI, and his father, Tony Stevens, were also found liable.
FCA executive director of enforcement and market oversight, Steve Smart, said: “These sham brokers preyed on vulnerable people who were struggling financially and trapped them with exorbitant fees.
“The defendants used a smokescreen of deception which cost consumers and lenders dearly.
“This was a complex case, but the ruling shows that these were serious breaches of our rules.
“It is only right that we can now pursue LPI, NPI, Daniel and Tony Stevens to compensate for the losses they caused victims.”
In his judgement, Mr Justice Fancourt described the breaches as “serious contraventions” that were conducted over an extended period, involving “high levels” of culpability.
This, according to the judge, included “deception of the consumers and the lenders”, and which took advantage of the “consumers’ vulnerability”.
Fancourt found that LPI had contravened the general prohibition in section 19 of the Financial Services and Markets Act 2000 in relation to 26 further individuals identified by the FCA.
Meanwhile, Tony and Daniel Stevens were both knowingly concerned in these contraventions.
The judge ordered the defendants to pay for losses caused to these and 45 other individuals.
Additionally, the four defendants were ordered to pay around £4mn to the FCA which the authority described as an “important next step in the case”.
The FCA will need to recover funds before any compensation can be paid to affected individuals.
Additionally, the ruling required LPI to remove restrictions registered against the titles of four properties as these restrictions were used to force individuals to pay “exorbitant” fees to LPI.
If these fees were not paid, then the individual could not sell or re-sell their property and, in some cases, this trapped individuals into high-interest bridging loans.
tom.dunstan@ft.com
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