FSA to seek out illegal mortgage brokers

A nationwide crackdown on unauthorised brokers who advise on and arrange mortgages illegally was launched yesterday by the financial industry watchdog.

The Financial Services Authority (FSA) took over the regulation of mortgages in October last year, and since January 14 2005, only brokers and advisers who are authorised by the body are allowed to sell and advise on home loans.

The FSA is now tracing companies and individuals who are continuing to sell mortgages illegally, including firms that registered or applied for authorisation, but then withdrew, and those that have been mentioned to them by members of the public.

Clive Briault, managing director at the FSA, said: "Tracking down firms operating outside our regime is a major priority for the FSA. This is vital to protecting consumers since they do not have access to statutory redress and compensation if they deal with unauthorised firms.

"At the same time we urge consumers to check the status of the firm they are dealing with before conducting business." The FSA has a "firm check service" on its website where consumers can find out whether a company is authorised.

Mr Briault said: "The FSA will not put firms out of business unnecessarily. Where breaches are inadvertent, or result from genuine misunderstanding, options for the firm will include obtaining proper authorisation.

"However, in order to protect consumers, the FSA can choose not to authorise firms that have wilfully breached the Financial Services and Markets Act and can take criminal proceedings if necessary."

A recent pilot scheme in Edinburgh and Glasgow included more than 100 visits to targeted firms. The crackdown in other areas across the UK is now continuing.