___________________________________________________________________________


FINAL NOTICE

___________________________________________________________________________

To:



Jagjeet Kaur

Of:



12 Aspen Court




Stoneleigh Road




Ilford




IG5 0HY









Individual reference number:
JXK01517





Date:



11 April 2011

TAKE NOTICE: The Financial Services Authority of 25 The North Colonnade, Canary
Wharf, London E14 5HS (the “FSA”) gives you, Jagjeet Kaur, final notice about an
order prohibiting you from performing any function in relation to any regulated
activity carried on by any authorised person, exempt person or exempt professional
firm

1.
THE ACTION

1.1.
The FSA gave you a Decision Notice on 23 February 2011 (the “Decision Notice”)
which notified you that, pursuant to section 56 of the Financial Services and Markets
Act 2000 (the “Act”), the FSA had decided to make an order prohibiting you from
performing any function in relation to any regulated activity carried on by any
authorised person, exempt person or exempt professional firm (the “Prohibition
Order”).

1.2.
You have not referred the matter to the Upper Tribunal (Tax and Chancery Division)
within 28 days of the date on which the Decision Notice was given to you.

1.3.
Accordingly, for the reasons set out below, the FSA has made an order prohibiting
you from performing any function in relation to any regulated activity carried on by
any authorised person, exempt person or exempt professional firm. The Prohibition
Order takes effect from 11 April 2011.

2.
REASONS FOR THE ACTION

2.1.
The FSA has concluded, on the basis of the facts and matters described below, that
you are not fit and proper as you lack honesty and integrity and because you have
failed to meet the requirements and standards of the regulatory system due to you
having knowingly submitted five personal mortgage applications for your own benefit
to lenders which contained inaccurate and misleading information. Specifically, you
have:

(1)
while working as a mortgage adviser at Gemmini Mortgages Limited
(“GML”), obtained two regulated residential mortgages supported by
inaccurate and misleading employment and income details, including the use
of inflated personal income figures from your employment at GML and three
other companies (“Firm One”, “Firm Two” and “Firm Three”);

(2)
submitted a further three regulated residential mortgage applications through
another firm, based on inaccurate and misleading information, including the
use of false documentation; and

(3)
mis-stated the intended use of the properties on the application forms when
you applied for residential mortgages for three properties (which you stated
would be used as your main residence), and then failed to notify the lenders of
the change in use of the properties when they were subsequently let out.

2.2.
As a result of the seriousness, nature and extent of your misconduct, the FSA has
concluded that you are failing to meet the minimum regulatory standards required in
terms of honesty and integrity, and are not fit and proper to perform any function in
relation to any regulated activity carried on by any authorised person, exempt person
or exempt professional firm. Accordingly the FSA has made the Prohibition Order
against you.

2.3.
This action supports the FSA’s regulatory objectives of maintaining confidence in the
financial system, the reduction of financial crime and the protection of consumers.

3.
STATUTORY PROVISIONS, REGULATORY GUIDANCE AND POLICY

3.1.
Relevant statutory provisions, regulatory guidance and policy are set out in the Annex
to this Final Notice.

4.
FACTS AND MATTERS RELIED ON

Background

4.1.
You were a mortgage adviser at GML, a small retail mortgage intermediary based in
East London, during the period from June 2006 to September 2008 (the “relevant
period”). Although you assisted with compliance and management functions at GML,
you were not an approved person at GML.

4.2.
You previously worked as a trainee mortgage adviser at Firm One. In addition to
GML and Firm One, you were also company secretary and a director of a number of

companies during the relevant period, including at Firms Two and Three. GML and
Firms One, Two and Three were all owned by the same individual.

Your mortgage applications

4.3.
The FSA has found that you knowingly submitted five personal mortgage applications
to lenders supported by materially different information during the relevant period.
The FSA’s findings relate to mortgage applications to:

(1)
Lender A dated 2 June 2006 in respect of Property One (“Application One”);

(2)
Lender B dated 2 June 2006 in respect of Property Two (“Application Two”);

(3)
Lender C dated 2 June 2006 in respect of Property Three (Application Three”);

(4)
Lender D dated 9 November 2006 in respect of Property Four (“Application
Four”); and

(5)
Lender E dated around September 2007 in respect of Property Five
(“Application Five”).

4.4.
Of the five mortgage applications, three applications were submitted through another
firm (Applications One, Two and Three) and two applications were submitted through
GML (Applications Four and Five). You obtained four regulated residential
mortgages as a result of these applications (Applications One, Three, Four and Five).
Of these, two were obtained through GML (Applications Four and Five).

4.5.
The FSA found inconsistent employment and income details between the
applications, discrepancies in the supporting pay slips and that you had mis-stated the
intended use of your properties on the application forms.

Inconsistent employment details

4.6.
In response to questions posed by the lenders about your current employment, you
disclosed the following information about GML:


Application
Application date
Employment
Start date

Application One
2 June 2006
Employed mortgage
adviser at GML
March 2006

Application Two
2 June 2006
Employed mortgage
adviser at GML
1 March 2006

Application Three
2 June 2006
Employed mortgage
adviser at GML
March 2006

Application Five
September 2007
Employed mortgage
adviser at GML
3 years and 1 month
i.e. since August 2004

4.7.
Companies House and FSA records confirmed that GML was incorporated on 11
October 2005 and was granted FSA authorisation on 1 June 2006. In Application
Five, you falsely declared a start date of August 2004 for your employment as a
mortgage adviser at GML, a date earlier than the date on which GML was
incorporated. In Applications One, Two and Three, you falsely declared a start date
of March 2006, a date earlier than the date on which GML was granted FSA
authorisation.

4.8.
Your employment start date for GML was also inconsistent with the information
disclosed in an individual approval application submitted to the FSA on your behalf
dated 8 January 2009. The individual approval application and an employer’s
reference from GML that accompanied the application stated that you began working
for GML from 30 May 2006, and not from March 2006 as indicated in Applications
One, Two and Three.

4.9.
In relation to Application Five, you stated at an interview with the FSA that your
employment start date of August 2004 included the period of your apprenticeship with
Firm One as continuous employment. However, the application form required you to
state how many years you had been employed with GML, not with any other firms.
You should therefore not have included the time you were employed at Firm One.
Your explanation was not reflected on the application form, even though the form
provided space for you to do so in the “Additional Information” section at the end of
the form, nor was there any record that you had ever informed Lender E of such
information.

4.10. The explanation you gave at an interview with the FSA was also inconsistent with the
information disclosed in Applications One, Two and Three, in individual approval
applications submitted to the FSA on your behalf dated 8 March 2006 and 8 January
2009 and in an employer’s reference from Firm One. These documents stated that you
were previously employed by Firm One from October/November 2005, and not from
August 2004 as indicated in Application Five or stated by you at interview.

4.11. Your employment contracts with GML dated 1 January 2006 and 2007 contained no
express provisions that allowed you to count the period of your apprenticeship with
Firm One as continuous employment. You were aware, or should have known, that
the period of your apprenticeship with Firm One could not count as continuous
employment given that you wrote your own employment contracts.

4.12. In addition, Firm One was not incorporated or permitted to conduct regulated
activities in August 2004. Companies House and FSA records confirm that Firm One
was incorporated on 25 October 2004 and became registered as an appointed
representative firm on 15 December 2004.

4.13. You also provided inconsistent information about your self-employment in two
mortgage applications (Applications Four and Five):



Application
Application date
Self-employment
Start date

Application Four
9 November 2006
Director and 25% shareholder
at Firm Two
1 year, i.e. since
November 2005

Application Five
September 2007
Property consultant and 100%
shareholder trading as Jagjeet
Kaur

3 years and 1 month,
i.e. since August 2004

4.14. You indicated in Application Four that you were a self-employed director at Firm
Two and owned a 25% share in the business. Companies House records showed that,
at the time of this mortgage application you were neither a director of Firm Two nor
owned a 25% shareholding.

4.15. Your employment contract with Firm Two dated 1 November 2005 described your
role as an employee and stated that you were employed as a non-executive director
and had been allocated a 25% shareholding to be paid. Application Four gave the
misleading impression that you were self-employed and owned a 25% share of Firm
Two when in fact you were an employee and were not a shareholder because your
25% allocated shareholding in Firm Two had not been paid up.

4.16. In addition, your tax return for the years ending 5 April 2007 and 2008 reported that
you had received both employed income from GML and self-employed income from a
business that traded as Jagjeet Kaur. Your tax returns did not reflect that you derived
income as a director from Firm Two. Also, you did not submit a tax return for the year
ending 5 April 2006 which indicates that you did not earn any self-employed income
for that period.

4.17. Further, you did not disclose accurate information about your employment in
Application Four. According to your employment contract with GML dated 1 January
2006, you were employed by GML as a mortgage adviser from that date. At the time
of this mortgage application, your employment with Firm Two had also changed.
According to your consultancy agreement with Firm Two dated 1 November 2006,
you stopped being an employee of Firm Two and became a consultant to the company
instead. Your employment with GML and the change in your employment status with
Firm Two were not reflected in Application Four. The information disclosed in
Application Four gave the misleading impression that you were a self-employed
director of Firm Two and owned a 25% share in the business.

4.18. In relation to Application Five, you disclosed that you were a self-employed property
consultant to Firm Two and had traded as Jagjeet Kaur since August 2004. Your
consultancy agreement with Firm Two stated that you were engaged as a consultant to
Firm Two on 1 November 2006, and not from August 2004 as indicated on the
application form. In addition, Companies House records confirmed that Firm Two
was only incorporated on 11 October 2005. Therefore, you could not have provided
consultancy services to Firm Two since August 2004.

4.19. You stated at an interview with the FSA that the start date of August 2004 was
incorrect and that you began providing property consultancy services when you
started working for Firm One in October 2005, rather than when you first started
working for Firm One in another capacity in 2004. Your explanation was not reflected
on the application form, even though the form provided space for you to do so, nor

was there any record that Lender E had been informed of such information. The
information disclosed in Application Five gave the misleading impression that you
had been a self-employed property consultant to Firm Two since August 2004.

4.20. Given the repeated nature of the discrepancies across five different mortgage
applications, the FSA concluded that you knowingly provided inaccurate and
misleading employment information to create the impression that you had an
established employment history and earned income from various sources.

Inconsistent income details

4.21. There were inconsistent income details on all five mortgage applications, which also
contradicted information contained in your employment contracts:


Application
Application date
Employed income
Self-employed income

Application One
2 June 2006
Mortgage adviser at
GML
£40,000 salary
£10,000 bonus

Application Two
2 June 2006
Mortgage adviser at
GML
£40,000 salary
£10,000 overtime/bonus
£20,000 commission

Application Three
2 June 2006
Mortgage adviser at
GML
£40,000 salary
£10,000 overtime
£20,000
commission/bonus

Application Four
9 November 2006

Director at Firm Two
£60,000 (2006)

Application Five
September 2007
Mortgage adviser at
GML
£36,000 salary

Jagjeet Kaur
£36,000 (2007)

4.22. You disclosed in Applications One, Two and Three that you earned a basic annual
salary as a mortgage adviser at GML of £40,000 and guaranteed bonus/overtime of
£10,000. However, you provided an additional income from regular commission of
£20,000 in Applications Two and Three which was not disclosed in Application One,
even though all three applications were submitted on the same date and Application
One asked specifically for annual commission details.

4.23. Application Two was accompanied by an employer’s reference. The income details
disclosed in the employer’s reference was different to the information disclosed on the
application form. The employer’s reference stated that you earned a basic salary of
£40,000 and bonus/commission of £20,000 but did not confirm that you earned an

7


additional income of £10,000 for overtime, even though the reference form
specifically asked for this information.

4.24. In addition, the income details disclosed in Applications One, Two and Three were
inconsistent with the information contained in your employment contract with GML
dated 1 June 2006. Your employment contract stated that you earned a gross salary of
£12,000, a guaranteed bonus of £12,000 and that you were entitled to a further bonus
of 10% of sales that completed.

4.25. By contrast, Application Four disclosed no income earned by you as a mortgage
adviser at GML but provided another source of income. You disclosed in this
application that you had earned a self-employed income as a director at Firm Two of
£60,000 for the year 2006, which was not reflected in Applications One, Two and
Three.

4.26. You did not disclose accurate income details in Application Four. According to your
employment contract with GML dated 1 January 2006, you were employed as a
mortgage adviser and earned a gross salary of £12,000, a guaranteed bonus of £12,000
and were entitled to a further bonus of 10% of sales that completed. At the date of this
application, your employment with Firm Two had also changed. According to your
consultancy agreement with Firm Two dated 1 November 2006, you became a
consultant to Firm Two and earned an annual fee of £36,000 for your services. Your
income from GML and the change in your role at Firm Two were not reflected on the
application form.

4.27. In addition, an enquiry form that accompanied Application Four stated that you were
employed by GML as a manager/mortgage adviser and that you earned a basic annual
income of £60,000. This was different to the information disclosed on the application
form which stated that you were a director at Firm Two and earned a self-employed
income of £60,000 for the year 2006. It is unclear which form has the correct
information.

4.28. In relation to Application Five, you provided income from an employed basis, which
was not disclosed in Application Four, as well as self-employed income from a
different source. According to two letters provided by GML in support of Application
Five, you derived other income of £36,000 on a self-employed basis from your work
as a property consultant to Firm Two and you also earned a gross annual basic salary
as a mortgage adviser at GML of £36,000 and an annual bonus of £3,000 to £12,000,
of which £3,000 was guaranteed.

4.29. You stated at an interview with the FSA that the discrepancies in income details
disclosed in Applications Four and Five may have arisen as a result of confusion
relating to your different roles at GML and Firms One, Two and Three.

4.30. You indicated that your income was evident from your bank statements. Your bank
statements for the period 1 June to 31 October 2006 showed monthly credits from
GML of £829, indicating an annual income of approximately £12,000 gross, which
was substantially less than the income figures disclosed in the five mortgage
applications. The statements also showed deposits into your bank account in the form

of cheque payments but these were on an ad hoc basis and did not demonstrate that
such payments were made from Firms One, Two or Three.

4.31. Information reported in your tax returns for the years 2007 and 2008 and recorded by
Her Majesty’s Revenue and Customs (“HMRC”) for the years 2006 to 2008 did not
support your stated earnings that were disclosed in these applications. Your total gross
income for the tax years ending 5 April 2006 to 2008 as reported in your tax returns
and recorded by HMRC was substantially less than what you disclosed in your
mortgage applications.

4.32. The information disclosed in your tax returns and recorded by HMRC suggests that
you have provided inaccurate and misleading employment and income details in
support of all five mortgage applications.

4.33. The FSA has concluded that you knowingly overstated your income on your mortgage
applications to meet the lenders’ lending criteria in order to obtain mortgages for your
properties.

Discrepancies in the supporting payslips

4.34. There were discrepancies in the payslips provided as proof of your income in support
of Applications One and Three. According to FSA records, GML was granted
authorisation to carry on regulated activities from 1 June 2006. You provided payslips
for your employment with GML for the period 31 March to 31 May 2006 when GML
had not started trading.

4.35. The payslips also contained different income details for the same periods of
employment. The payslips in support of Application One stated that your monthly
income consisted of salary and bonus payments, whereas the payslips in support of
Application Three stated that your monthly income consisted of salary, bonus and
commission payments. The income details recorded in the payslips supported the
information disclosed on the relevant application forms. Application Three disclosed
that your income consisted of additional earnings from commission which was not
disclosed in Application One. Similarly, the payslips in support of Application Three
reflected that you received earnings from commission but the payslips in support of
Application One did not.

4.36. The payslips in support of Application One showed that you received a monthly gross
income of £4,166.66, amounting to an annual gross income of £49,999.96. The
payslips in support of Application Three showed that you received a monthly gross
income of £5,833.33, amounting to an annual gross income of £69,999.96. Both
figures were inconsistent with the information contained in your employment contract
with GML dated 1 June 2006. Your employment contract stated that your income
consisted of a gross salary of £12,000, a guaranteed bonus of £12,000 and that you
were entitled to a further bonus of 10% of sales that completed.

4.37. The total gross pay to date figures shown in the payslips dated 31 March 2006 of
£24,999.96 in support of Application One and £34,499.98 in support of Application
Three indicated that you had been in receipt of an income from GML for at least six
months since October 2005. The employment start date of October 2005 was

inconsistent with the information disclosed on both application forms, which stated
that your employment with GML started from March 2006.

4.38. In addition, the total gross pay to date figures of £24,999.96 and £34,499.98 shown in
the payslips dated 31 March 2006 was inconsistent with information recorded by
HMRC for the year ending 5 April 2006.

4.39. You also provided payslips in support of Application Five for the period 30 June to 31
August 2007, which indicated that you received a monthly net income of £2,185 from
GML. The income details on the payslip dated 31 July 2007 was inconsistent with the
information recorded on GML’s bank statement for the period 9 July to 8 August
2007. GML’s bank statement showed a payment to you of £829.27 on 10 July but did
not reflect any payment to you of £2,185 on or around 31 July 2007, or at any other
time during that month.

4.40. The FSA has concluded that you knowingly provided false payslips to three lenders
with the intention of obtaining mortgages that your actual level of income would not
service and support. This is evidenced by the fact that, at an interview with the FSA,
you stated that three of your four properties had been repossessed.

Mis-statement of intended use of properties

4.41. You failed to be open and honest with Lenders A, B and C when you submitted
Applications One, Two and Three in respect of Properties One, Two and Three when
giving your intentions about residing in the properties. These applications were
submitted on the same date (although Application Two did not proceed) and you
disclosed that Properties One, Two and Three were intended to be your main
residence. Had you disclosed on the application forms that you had submitted three
different mortgage applications simultaneously on a residential basis, Lenders A and
C may not have granted the mortgages applied for in respect of Properties One and
Three. In addition, a letter provided by GML to Lender E subsequently confirmed that
you had never resided at Property One and that it was a buy-to-let property.

4.42. You also failed to be open and honest with Lenders D and E in making Applications
Four and Five in respect of Properties Four and Five on a residential basis. You
informed Lender D that Property Four would be your primary residence and you
confirmed in a letter in support of Application Four that Property Three would be let
out within three months of the completion of the mortgage for Property Four.
However, Property Three was not let out. In relation to Property Five, you stated at an
interview with the FSA that you subsequently let out this property after some time
because it had been vacant.

4.43. In summary, you let out Properties One, Four and Five, while Property Three has
remained your main residence. You stated at an interview with the FSA that you had
notified Lenders A, D and E when your properties were let out and had corresponded
with the lenders about the change in use of your properties. Lender E has confirmed to
the FSA that it did not receive any request from you to change the status of your
mortgage for Property Five from residential to buy-to-let.


4.44. Given that your properties were let out shortly after the mortgages completed, and you
have remained resident at Property Three, the FSA has concluded that you knowingly
applied for mortgages on a residential basis and then deliberately failed to notify the
lenders of the change in use to your properties to benefit from paying lower rates of
interest for your mortgages.

Your explanations

4.45. When asked at an interview with the FSA why you had failed to disclose full and
accurate income details on Application Four, you stated:

“Because the income there is more than enough to purchase the property without
stating all my income streams, because I mean I’d be filling up pages and pages by to
trying to explain what different roles and different companies and different income
derived from all the various companies, and how everything is set up.”

4.46. When asked at interview to confirm whether you understood the importance of
disclosing accurate information about your employment and income to the lenders,
you stated:

“They also carried out their own verification, looked at my bank statements, looked at
Companies House. All of this information is public information.”

4.47. In your written response to the preliminary FSA findings, you explained that because
you were involved with many companies and entitled to various sources of income,
your employment details disclosed on the application forms reflected what was
necessary to obtain the relevant mortgage product. Despite the errors and omissions,
you stated that the issues identified by the FSA were not material or relevant to the
mortgage applications.

4.48. As a mortgage adviser, you were aware of the need to make full and accurate
disclosure in making mortgage applications, and therefore should have done so from
the outset. You should have provided the lenders with accurate information about
your employment, income and personal details so that they could have made informed
lending decisions. The information disclosed by you could have affected the type of
information sought as proof of your income or the amount of due diligence
undertaken into your financial affairs. By failing to do so, you failed to be open and
honest with the lenders.

4.49. You have submitted five personal mortgage applications supported by inaccurate and
misleading information, two of which were submitted through GML (Applications
Four and Five), and you mis-stated the intended use of your properties in three
applications (Applications One, Four and Five). Your position as a mortgage adviser
means that you were aware of the importance of disclosing correct information in
your applications but you failed to do so.

4.50. The fact that a number of applications were submitted within a short period of time
during 2006 and 2007 with different personal and financial details suggests that you
were aware that you were submitting inaccurate and misleading information to the

lenders. Further, you submitted Applications One and Three through another firm and
these applications were supported by false payslips. The existence of your payslips on
the mortgage file of another firm indicates that you must have provided the payslips
and would therefore have been aware that they contained inaccurate and misleading
information. The five applications demonstrate the extent of your repeated misconduct
and highlight the material inconsistencies in the information submitted by you to the
lenders.

5.
ANALYSIS OF THE MISCONDUCT

5.1.
The reasons for the action are summarised in section 2 above. In particular:

(1)
your misconduct in submitting five mortgage applications, and in obtaining
four mortgages, for yourself based on false and misleading information was
extensive and deliberate;

(2)
you showed a disregard for the interests of the lenders; and

(3)
your misconduct took place while you were working as a mortgage adviser at
GML.

Extensive and deliberate nature of the misconduct

5.2.
You gave false and misleading information in five mortgage applications over a
period of 15 months in connection with the duration and status of your employment
and the sources of your income. There were discrepancies between the information
disclosed on the application forms and supporting documents, and there were
inconsistencies in information provided across the applications.

5.3.
You also failed to notify your lenders of the change in use of three of your properties,
the mortgages for which had completed on a residential basis with a different lender.
The lenders were therefore not in a position to reassess the risk and the terms of the
mortgages.

5.4.
These were all matters of fundamental significance to your lenders.

The interests of the lenders

5.5.
A prospective lender needed to be able to assess the risks of lending to a prospective
borrower by taking into account all material factors, including details of employment
and income. The false and misleading information in each of your application
prevented a lender from making an informed decision based on an accurate
assessment of risk. Collectively, such conduct would have an adverse affect on the
stability of the mortgage market.

Your role as a mortgage adviser

5.6.
You gave no indication that you appreciated the importance of disclosing accurate
employment and income details or recognised the extent of the errors and omissions
in respect of your own mortgage applications. Instead, you placed the onus on the

lenders to check the accuracy of the information given and to make further enquiries
into your financial position.

5.7.
As a mortgage adviser at GML, a firm in the business of advising on and arranging
mortgages for customers, you should have known and understood the importance of
disclosing correct information in support of mortgage applications. The lenders you
dealt with and the mortgage sector generally would all have expected you to have
provided full and accurate information but you failed to do so.

6.
YOUR REPRESENTATIONS

6.1.
You made written representations to the FSA by letters dated 13 September, 2
October and (by email) 5 October 2010. You made oral representations on 21
December 2010 and further written representations on 31 December 2010, 17 January,
31 January and 3 February 2011.

Written representations

6.2.
In summary, you made the following points in your written representations.

Inconsistent employment details

6.3.
You said that you “categorically gave all the contract of employment documents”.
You had counted your previous position with another company as part of your
employment with GML as essentially you worked with the same person who was a
director of both companies.

6.4.
You said that some of the issues observed were not material and insignificant. They
did not in any way significantly influence a mortgage application because lenders
relied on the affordability test of income, i.e. the ability to pay monthly instalments.
You said:

“Whilst it is generally accepted that employment details will readily provide proof of
income but in my circumstances because I was involved with different companies and
entitled to varied income streams ie dividends, business consultancies, etc my
employment details depending on the particular mortgage application form was
appropriately reflected correctly on what were necessary legitimately to match the
product.”

6.5.
You said that, in all sub prime products, emphasis is on the affordability test which
only asks the borrower to “self cert” the income. “There are no hard and fast rules on
the employment details to use.”

Discrepancies in respect of income details

6.6.
You said that your accountant had prepared your income statements based on the
advice of each mortgage packager that used appropriate income streams that suited
best each mortgage product. Where there were discrepancies in the income stated, it
was because each product was different and:

“… the choice of the relevant income stream like self employment status legitimately
could best achieve fast and early mortgage completion as determined by the mortgage
packager.”

6.7.
You noted that all the tax returns were prepared by your former accountant.

6.8.
On the false payslips, you said that proof of your income in support of your mortgage
applications was correct. You said that the simple omission or statement which was
not deliberate cannot amount to a false statement. You said that:

“…there is not a hard and fast rule that any omission or mistake … will amount to an
intent to make false payslips to obtain a mortgage or necessarily amounts to a
deliberate intent to omit an information of material significance and therefore cannot
amount [a] false statement to enable me to obtain mortgage as wrongly stated in the
report.”

6.9.
You said that for you to make a false statement you had to be dishonest. You relied
on two cases relevant to criminal proceedings.

6.10. You said that the income details on the payslips were correct and the tax returns were
submitted by your former accountant. At no time was your state of mind dishonest.
You relied on cases drawn from the law of tort relating to the duty of care.

“Residential scheme abuse”

6.11. When submitting the first and third mortgage applications, you were not sure which
property to reside in. You then found that the property you resided in did not seem to
be in a safe neighbourhood so you let it out.

Other points

6.12. You never intentionally submitted any misleading mortgage application to any lender.

6.13. You bought “the other” properties with the intention of living in them but when you
changed your mind you always informed the lenders which they all denied during the
investigations because it was convenient for them to do so.

6.14. You did your best to uphold the standard set for the financial industry practitioners by
implementing the Processes and Systems in GML and the other companies in the
Gemmini group that led to the companies being awarded the Certificate in Certified
Quality Systems to the Standards and Guidelines BS EM ISO 9001. You were all
shocked when the FSA investigators accused “us” of breaching ethical standards.
You worked closely with a compliance firm who should have pointed out the issues
raised by the FSA.

6.15. You felt that “we” had been singled out by the FSA investigation department and used
as a scapegoat because they never paid “us” a supervisory visit to point out areas of
improvement.

6.16. You were proud to be a mortgage broker. You always presented the information to
the mortgage lenders as your status was at the time of the application. You never, and

would never, intentionally do anything to bring the financial services industry into
disrepute.

Oral representations

6.17. In your oral representations on 21 December 2010, you sought to give an overview on
how the company conducted its business and ask the question whether the behaviour
of such a company was consistent with the behaviour of a company which undertakes
fraudulent activities or tries to mislead or misrepresent itself.

6.18. Among a number of other things, you said that the most important thing for the lender
was that the borrower should demonstrate affordability and that in your case you did
this by disclosing your bank statements to them.

6.19. You blamed your former accountant for your problems with your tax returns.

6.20. In hindsight, you would have kept things simpler and worked for one company only
so that the history of what you did was easier to capture. You would also have given
all the information to the underwriters rather than speak to them.

6.21. At the time the payslips were issued for the same date but with different information
on them, you did not realise that there must have been an error. You had the error
corrected as soon as you did realise the error.

6.22. The reason you had failed to disclose in an application form to the FSA that four
properties had been repossessed was that the form had not asked for the information.
However, you were not trying to hide the information and had openly disclosed it to
the FSA during her interviews and you had told the relevant firm.

6.23. At the oral representations meeting, you were given the opportunity of reconciling the
inconsistencies in your income in your mortgage applications with your bank
statements or your tax returns, or both. You subsequently provided the FSA with
your bank statements with one bank from 1 January 2005 to 31 December 2008 to
confirm all your income from employed (i.e. salary) and self-employed (i.e.
commission) sources from the Gemmini group companies. You also provided your
last three reconciled tax returns and tax assessments from HMRC. You hoped the
bank statements would be sufficient to prove that you actually earned the incomes
stated in the mortgage application forms because they were the main documents
requested and relied upon by the mortgage lenders as proof of income.

7.
FINDINGS

7.1.
The FSA has found that the inconsistencies in the application forms were not
adequately explained and has concluded that your behaviour was both dishonest and
showed that you lacked integrity.

7.2.
In explaining your behaviour, you:

(1)
gave the FSA the background to the approach to compliance of GML and the
other firms in the group as a whole;

(2)
blamed your former accountant;

(3)
relied on the overriding importance of what you called the ‘affordability test’,
i.e. the prospective lender was only interested in whether you could afford the
repayments and not in the detailed disclosure of all your streams of income;

(4)
relied on the importance of demonstrating to the lender the continuity of your
employment in a group generally;

(5)
said that simple omissions or statements that were not deliberate could not
amount to false statements;

(6)
said that you had applied for two mortgages on the same date on the basis that
you would be living in each of them on the basis that you had not made up
your mind which one to live in;

(7)
said that you had never intentionally submitted a misleading mortgage
application to any lender; and

(8)
offered to reconcile the statements in mortgage applications with your bank
statements and HMRC returns but failed to do so.

7.3.
The FSA finds that the explanations for the inconsistencies do not adequately explain
or justify your behaviour.

The affordability test

7.4.
The FSA does not accept that the fundamental test for a prospective lender is whether
the applicant can demonstrate that the repayments can be afforded. It is for the
applicant to answer the question which is asked rather than to make a judgement on
what the lender is looking for. Without underestimating the importance of a
judgement on affordability by the lender, it is for the lender to make its decision based
on the answers to the questions it poses and not for the borrower to anticipate the
decision by making a partial disclosure, whether prompted by a misguided assumption
on the need to give full disclosure or expediency or any other reason.

Continuity of employment

7.5.
Similarly, a question on employment does not permit the applicant to give what he or
she believes the lender needs. A full disclosure can always be accompanied by an
explanation if appropriate. A partial disclosure, possibly based on expediency at the
time, cannot be condoned by a belief that this was what the lender was really asking
for anyway.

False statements

7.6.
The FSA does not accept that a statement has to be dishonestly given in order to be
“false”. Neither the state of mind of the person making the statement nor the person’s
intent is relevant. It is a matter of fact whether a statement is true or false.

An understanding of your actions

7.7.
Although you acknowledged that you had overstretched yourself in your work, the
FSA found that you displayed little or no regret for the inconsistencies in your
applications and therefore the false basis on which the lenders had based their
decisions. Although you said that you had informed the lenders orally of other
matters which were not disclosed on the forms, there was no evidence of this. And
although you went to great lengths to disclose your bank statements and other
material to the FSA, these documents, of themselves, were inadequate to explain your
sources of income and the information given to the prospective mortgage lenders.

7.8.
Until you demonstrate an understanding of the nature of what you have done, and a
commitment to a different approach in the future, the FSA believes that you will
continue to be a risk to consumers.

7.9.
The FSA has concluded that in the circumstances your conduct demonstrates a lack of
honesty and integrity and that you are therefore not fit and proper to perform any
function in relation to any regulated activity carried on by any authorised person,
exempt person or exempt professional firm.

7.10. In the light of the above conclusion, and having regard to the guidance summarised in
the Annex to this Final Notice, in order for it to achieve its statutory objectives of
maintaining confidence in the financial system, the reduction of financial crime and
the protection of consumers, the FSA has therefore made the Prohibition Order
against you.

8.
DECISION MAKER

8.1.
The decision which gave rise to the obligation to give this Final Notice was made by
the Regulatory Decisions Committee.

9.
IMPORTANT

9.1.
This Final Notice is given to you in accordance with section 390(1) of the Act.

Publicity

9.2.
Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of information
about the matter to which this Final Notice relates. Under those provisions, the FSA
must publish such information about the matter to which this Final Notice relates as
the FSA considers appropriate. The information may be published in such manner as
the FSA considers appropriate. However, the FSA may not publish information if
such publication would, in the opinion of the FSA, be unfair to you or prejudicial to
the interests of consumers.


9.3.
The FSA intends to publish such information about the matter to which this Final
Notice relates as it considers appropriate.

FSA contact

9.4.
For more information concerning this matter generally, you should contact Anna
Hynes (direct line: 020 7066 9464 / fax: 020 7066 9465) of the Enforcement and
Financial Crime Division at the FSA.





……………………………………………………
Tom Spender
Head of Department
FSA Enforcement and Financial Crime Division

ANNEX


STATUTORY PROVISIONS, REGULATORY GUIDANCE AND POLICY

1.
STATUTORY PROVISIONS

1.1.
The FSA’s regulatory objectives are set out in section 2(2) of the Act and include
maintaining confidence in the financial system, the reduction of financial crime and
the protection of consumers.

1.2.
Section 56 of the Act provides that the FSA may make a prohibition order if it appears
to the FSA that an individual is not a fit and proper person to perform functions in
relation to a regulated activity carried on by an authorised person. Such an order may
relate to a specific regulated activity, an activity falling within a specified description
or all regulated activities.

2.
REGULATORY PROVISIONS

2.1.
In exercising its power to make a prohibition order, the FSA has had regard to
relevant regulatory guidance and policy published in the FSA’s Handbook.

2.2.
The FSA’s Enforcement Guide (“EG”) came into effect on 28 August 2007. Although
the references in this Final Notice are to EG, the FSA has also had regard to the
appropriate provisions of the FSA’s Enforcement Manual, which preceded EG and
applied during part of the relevant period.

2.3.
The guidance and policy that the FSA considers relevant to this case is set out below.

Fit and Proper Test for Approved Persons (“FIT”)

2.4.
The FSA has issued specific guidance on the fitness and propriety of individuals in
FIT. The purpose of FIT is to outline the main criteria for assessing the fitness and
propriety of a candidate for a controlled function and FIT is also relevant in assessing
the continuing fitness and propriety of approved persons.

2.5.
FIT 1.3.1G provides that the FSA will have regard to a number of factors when
assessing a person’s fitness and propriety. One of the most important considerations
will be a person’s competence and capability.

2.6.
FIT 1.3.3G provides that it would be impossible to produce a definitive list of all the
matters which would be relevant to a determination of a particular person’s fitness
and propriety.

2.7.
FIT 1.3.4G provides that if a matter comes to the FSA’s attention which suggests that
the person might not be fit and proper, the FSA will take into account how relevant
and how important it is.


2.8.
FIT 2.1.1G provides that in determining a person’s honesty, integrity and reputation,
the FSA will have regard to all relevant matters including, but not limited to, those set
out in FIT 2.1.3G, including:

(1)
whether the person has contravened any of the requirements and standards of
the regulatory system or the equivalent standards or requirements of other
regulatory authorities (including a previous regulator), clearing houses and
exchanges, professional bodies, or government bodies or agencies (FIT
2.1.3G(5)); and

(2)
whether, in the past, the person has been candid and truthful in all his dealings
with any regulatory body and whether the person demonstrates 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 (FIT 2.1.3G(13)).

Enforcement Guide (“EG”)

2.9.
The FSA’s approach to exercising its power to make a prohibition order under section
56 of the Act is set out in Chapter 9 of EG.

2.10. EG 9.1 states that the FSA’s power under section 56 of the Act to prohibit individuals
who are not fit and proper from carrying out controlled functions in relation to
regulated activities helps the FSA to work towards achieving its regulatory objectives.
The FSA may exercise this power to make a prohibition order where it considers that,
to achieve any of those objectives, it is appropriate either to prevent an individual
from performing any functions in relation to regulated activities, or to restrict the
functions which he may perform.

2.11. EG 9.4 sets out the general scope of the FSA’s power in this respect. The FSA has
the power to make a range of prohibition orders depending on the circumstances of
each case and the range of regulated activities to which the individual’s lack of fitness
and propriety is relevant.

2.12. EG 9.5 provides that the scope of the prohibition order will depend on the range of
functions which the individual concerned performs in relation to regulated activities,
the reasons why he is not fit and proper and the severity of risk which he poses to
consumers or the market generally.

2.13. EG 9.9 provides that when deciding whether to make a prohibition order against an
approved person, the FSA will consider all the relevant circumstances of the case.
These may include, but are not limited to, the following:

(1)
whether the individual is fit and proper to perform the functions in relation to
regulated activities. The criteria for assessing the fitness and propriety of
approved persons are set out in FIT 2.1 (honesty, integrity and reputation), FIT
2.2 (competence and capability) and FIT 2.3 (financial soundness) (EG
9.9(2));

(2)
the relevance and materiality of any matters indicating unfitness (EG 9.9(5));

(3)
the length of time since the occurrence of any matters indicating unfitness (EG
9.9(6)); and

(4)
the severity of the risk which the individual poses to consumers and to
confidence in the financial system (EG 9.9(8)).

2.14. EG 9.12 provides a number of examples of types of behaviour which have previously
resulted in the FSA deciding to issue a prohibition order. The examples include
severe acts of dishonesty, which may have resulted in financial crime serious lack of
competence (EG 9.12(3)).

2.15. EG 9.17 to 9.18 provides guidance on the FSA’s exercise of its power to make a
prohibition order against an individual who is not an approved person or exempt
person. The FSA will consider the severity of the risk posed by the individual and
may prohibit the individual where it considers this is appropriate to achieve one or
more of its regulatory objectives. When considering whether to exercise its power to
make a prohibition order against such an individual, the FSA will consider all the
relevant circumstances of the case, which may include, but are not limited to, the
factors sets out in EG 9.9.




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