City watchdog's fines at record

Mortgage fraudsters have been a key target for the watchdog

The City watchdog handed down fines of £22m in 2008 as it clamped down on cases of mortgage fraud and loan insurance mis-selling.

The Financial Services Authority (FSA) issued a record 48 fines for breaches that also included pressure selling, pension transfers and market abuse.

The biggest was a £7m penalty against Alliance and Leicester for mis-selling payment protection insurance (PPI).

Some 38 people were banned from working in the financial services industry.

The total value of fines was four times greater that the £5.3m ($7.7m) handed down by the FSA in 2007, and the highest since 2004.

Some 103 firms were also not allowed to continue regulated activities.

It marks a shift to a stricter approach by the watchdog against those breaking the rules as the economic downturn starts to bite.

Record fine

The hefty fine handed down to Alliance and Leicester in October led to PPI mis-selling being the category with the biggest total fine pot in 2008 - £10m.

Heaviest FSA fines Payment protection insurance: £10m Systems and controls: £8.9m Pension transfers: £1.1m Car insurance pricing: £735,000 The story behind the mortgage fraud crackdown

PPI is typically sold alongside a loan and provides cover if the debt repayments cannot be met because of death or redundancy.

But from January 2005 to the end of 2007 A&L trained its staff to put pressure on customers who queried the inclusion of optional PPI in a loan quote.

The bank, which is being taken over by Banco Santander, apologised and promised to pay people back.

Mortgage fraud

Fourteen individuals were fined for breaches of the rules in the financial services sector.

The largest of these penalties was £129,000 levied against mortgage broker Sadia Nasir in July.

The director at London Mortgage and Financial Services, whose firm traded as House of Finance, submitted seven mortgage applications containing false information about her employment and earnings which were supported by falsified documents.

In four cases she entered her own bank account details on clients' mortgage applications.

The FSA said she withheld information from its investigators and her actions were "particularly serious and blatant".

At the time the watchdog said it was "intensifying" a crackdown on mortgage fraud when bosses told BBC News that mortgage fraud was a "serious and widespread problem".

The most common form of mortgage fraud is inflating the income of the applicant. Sometimes this is with the customer's consent, sometimes not.

The advantage to the customer is a bigger mortgage for a bigger property. The broker wins a larger commission. It became more prevalent during the later years of the housing market boom.

The latest action against mortgage brokers was announced earlier in the week.

Sole trader brokers Andrew David Bowden, trading as Scott Jarrett Bowden and Partners based in Surrey, and Shaun Lawrence, based at Brinsley in Nottinghamshire, were both banned.

Among other issues, both failed to keep a record of all customers files and failed to keep documents secure, the FSA said.

"The FSA will not tolerate firms which fail to understand and comply with our rules," said Jonathan Phelan, the FSA's head of retail enforcement.