FSA fines three mortgage brokers £50,000

The Financial Services Authority (FSA) has fined three partners of Sheffield mortgage broker Pace Financial Management a combined £50,000 for failing to prevent one of its own staff members committing fraud.

The regulator said partners Paul Armitage, Huw Evans and Brian Smith failed to ensure appropriate systems and controls were in place to prevent financial crime, It has fined Armitage and Evans £17,500 each and Smith £14,000.

The FSA acted after it discovered an ex-adviser who left Pace in 2008 to join Derby-based firm Belmont had been committing fraud while working at Pace.

The adviser, who was convicted of 15 fraud offences, was found to have worked alongside an ex-partner of Pace.

The FSA said Pace's partners had failed to effectively supervise peers at Pace who had been put in charge of recruitment and supervision of employees.

The partners were found to have failed to effectively supervise mortgage advisers at their firm, and did not put in place effective file-checking procedures, which enabled an ex-partner to carry out financial crime with one of Pace's mortgage advisers.

No financial crime was committed at Belmont, and it was spared a £17,500 fine because it is in 'financial difficulties' the FSA said.

Margaret Cole (pictured), director of enforcement and financial crime at the FSA said: 'By lacking the essential systems and controls to meet the FSA’s standards, Pace put itself at risk of financial crime, and this was taken advantage of by two dishonest and unscrupulous employees.

'The Belmont case illustrates the importance of stringent vetting procedures, as the firm took on an adviser that had already committed financial crime and could have done so at Belmont.'