UK: FSA goes on banning spree

In informing Mr Amjad Ali Malik 37 York Road Ilford Essex IG1 3AD in East London of the reasons as to why the FSA was issuing a final notice prohibiting him from performing any function in relation to any regulated activity, the FSA was blunt to the point of being brutal, even though Malik "agreed that you will not be referring the matter to the Financial Services and Markets Tribunal" and "agreed to settle at an early stage of the FSA’s investigation on the basis of the Prohibition Order."

The FSA concluded that he was "not a fit and proper person to cary out any functions in relation to any regulated activities." He had, the FSA said in its notice to him "failed to meet minimum regulatory standards in terms of honesty and integrity, which includes an obligation to demonstrate a readiness and willingness to comply with the requirements and standards of the regulatory system and with other legal, regulatory and professional requirements and standards."

He posed "pose a risk to lenders and therefore to confidence in the financial system. Also this action should be taken against you in support of the FSA’s financial crime objective."

So what did he do to justify that ire? Frankly, he was one of many around the world who helped applicants for mortgages to make fraudulent applications when "mortgage applications submitted by you to lenders when you worked at a firm called York Financial Services were based on false information."

But as if that wasn't bad enough, he then moved onto another company in a supervisory capacity "in your capacity as a person performing governing functions at an authorised person (Abbaci Associates), you failed to take steps to identify and act on obvious anomalies and false information contained in mortgage applications, such that you failed to take reasonable steps to prevent the authorised person from being used to commit financial crime. You also failed to notify the FSA that Abbaci Associates, of which you are a partner, was removed from the panels of three mortgage lenders. Furthermore, you are not appropriately qualified to give mortgage advice, and yet you acted as a mortgage adviser at Abbaci Associates."

His actions were, to say the least, disgraceful. On one occasion, he submitted two applications for the same client with application forms disclosing two different amounts and using two different accountants as references. One of those firms of accountants was Abbaci Associates. Despite acting for the client since 2000 or before and therefore having reason to be aware of the applicant's financial position, the information on the form did not accord with that in the hands of the firm.

Acting as a mortgage adviser, he completed a number of forms. The FSA examined nine - and found false information, mostly relating to occupation and incomes, on all nine.

The firm ceased conducting regulated business on 11 October "at the request of the FSA." One can only guess how that request was worded.

A second case was brought against Mr Tahir Mahmood of the same address - and also a partner in Abbaci Associates.

Acting as mortgage adviser, he failed to inform the FSA that it had been removed from their panels. The FSA said "A lender confirmed to the FSA that it had removed Abbaci Associates from its panel of mortgage intermediaries because of concerns about the submission of false mortgage applications by Abbaci Associates. "

The FSA reviewed three files which it says contained "false information supported by false documents... It is highly likely that you saw the completed application forms and were aware that the customers were claiming to be employees of your business." Two claimed to be, and had payslips showing substantial salaries showing them to be, employees of York Financial Services. Yet all of those records were fictitious. A third one claimed to be employed by another company - but the format of her payslips was identical to those provided by York. The third application showed an income of GBP48,000 - but in fact the applicant had been unemployed since 1999.

Although the sanction against Mahmood is the same as against Malik, there is a significantly softer tone in the comments made about him.

In an entirely separate matter, the FSA resolved to "cancel the permission granted to Aidan Mortgage Consultants Limited to carry on regulated activities." The company, of Design Works, William Street, Gateshead, Tyne and Wear, NE10 0JP.

The decision was not a disciplinary matter but a prudential regulatory issue: simply, the company failed to meet its capital adequacy ratio.

The order says "This is because Aidan has failed to maintain capital resources equal to or in excess of its relevant capital resources requirement, and it appears that Aidan has not met that requirement at any stage during its authorisation, despite having made a specific commitment to do so when Aidan applied for FSA authorisation. These failings are significant and material in relation to the regulated activities for which Aidan has permission, and Aidan therefore fails to satisfy Threshold Condition 4 (Adequate resources)