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The FSA visited London-based Mortgageland  in 2006 and found that the firm failed to give sufficient prominence to the annual percentage rate (APR) in a mortgage promotion aimed at people with county court judgements, loan arrears or defaults.

In another promotion, the firm failed to indicate the level of fee that customers would be charged or set out that the fee included an amount to cover other fees which were paid by the firm on the customer’s behalf.

In addition, the FSA said that Mortgageland failed to record appropriate details of customers' needs and circumstances including, in some cases, how customers planned to repay the mortgage and their income and expenditure details.

The FSA considered Mortgageland’s failings to be serious due to the potential impact on its customers, many of whom were recorded as having adverse credit histories or were consolidating debts, or both.

Margaret Cole, director of enforcement at the FSA, pointed out that taking out a mortgage is one of the most important decisions anyone makes during their life.

She warned that poor practice by firms in this area posed a high risk to consumers and added that this is particularly the case when it comes to sub-prime mortgages, given the vulnerable nature of the target audience.

Cole said that it was essential that firms' financial promotions were clear, fair and not misleading, so that consumers knew exactly what they were buying.

“Poor financial promotions often go hand in hand with other problems at firms. In this case, the firm also demonstrated poor record-keeping, both in terms of assessing suitability and documenting recommendations made," Cole concluded.

Once made aware of the FSA’s concerns, Mortgageland amended its financial promotions and took steps to remedy the other failings.

Mortgageland - motto "Treating customers fairly" - has agreed that any future mortgage-related financial promotions will be approved by an individual with appropriate expertise.

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Related links

• Financial Services Authority
• Mortgageland Limited
• Final notice