The Upper Tribunal (Tribunal) has upheld the decision of the Financial Conduct Authority (FCA) to impose a financial penalty of £80,000 on Amir Khan, director of Sovereign Worldwide Limited (Sovereign), for dishonestly submitting false income details to a mortgage lender in a personal mortgage application.
The judgement was issued by the Tribunal on 8 April 2014 after a two day hearing in January 2014. It remains open to Mr Khan to appeal this judgement.
The Tribunal found that Mr Khan had dishonestly submitted inflated income figures to a lender in a personal mortgage application in 2009. He provided false payslips to the lender in support of this application. In 2007, Mr Khan had also submitted false income details in an application for a mortgage. In its decision, The Tribunal commented, "In our view the evidence that the behaviour concerned demonstrates dishonesty on Mr Khan’s part is cogent and compelling."
Having considered Mr Khan’s conduct and heard evidence about the risk of fraud within the mortgage industry, the Tribunal said, "We accept that a substantial financial penalty is required in this case in order to achieve the necessary deterrent effect, bearing in mind the overall prevalence of mortgage fraud, its potential effect on the stability of the financial system, and the position of trust that a mortgage intermediary finds himself in."
The Tribunal also found that Mr Khan had deliberately disposed of assets to reduce his ability to pay a financial penalty, and that he had concealed this from the FCA during its investigation. The FCA proposed to the Tribunal that Mr Khan’s misconduct merited a minimum penalty of £100,000; the Tribunal considered all of the circumstances and determined that £80,000 was an appropriate penalty in this case.
Mr Khan did not contest the FCA’s finding that he had failed to take reasonable steps to protect his firm, Sovereign, from mortgage fraud risk. He also did not contest the FCA’s decision to prohibit him from performing any regulated activities. The FCA will shortly impose this prohibition on Mr Khan by way of a Final Notice.
Sovereign has not been authorised by the FCA since having its permission cancelled on 4 July 2013.
The FCA has continued to tackle fraud in the mortgage market by taking action against unfit mortgage brokers. Since 2006 the Authority has prohibited 112 individuals for misconduct in relation to mortgage fraud.
Notes for editors
- The Tribunal’s judgement
- The Tribunal judgment sets out that, at Warning Notice stage, the FCA proposed to fine Mr Khan a total of £103,300. This comprised £100,000 for Mr Khan’s Principle 1 breaches and £3,300 for Mr Khan’s breaches of Principle 6. In its Decision Notice the RDC agreed on a fine of £80,000 for Mr Khan’s Principle 1 breaches. Separately, it reduced the fine of £3,300 for Mr Khan’s Principle 6 breaches to zero, on the grounds of financial hardship. The Tribunal was not asked to make a judgment on the fine that should be imposed for Mr Khan’s Principle 6 breaches, all of which he accepted. The Tribunal agreed with the RDC that the fine for Mr Khan’s breaches of Principle 1 should be £80,000.
- Reporting mortgage fraud
- Thematic review: Mortgage fraud against lenders, June 2011.
- On 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.