The description of Lisburn’s Noel Heaney by his regulator was damning: he “lacks integrity and is not competent to run an authorised firm”.
As a result, his mortgage broking business — Heaney Finance — has been banned by the Financial Services Authority.
Previously Heaney sold secured and personal loans and consolidated debt services, as well as mortgages.
But the FSA has banned him acting as a mortgage broker, investment advisor or from undertaking various other regulated activities after identifying wide-ranging management and control problems across his business and for failing to treat his customers fairly.
The FSA found that Heaney had allowed an inexperienced employee to run his firm on his behalf while failing to ensure he kept informed of the business conducted in his name.
Moreover, his advisers did not receive adequate training and support.
The banning of Heaney should act as a warning to all consumers of financial products.
Heaney is not the first financial intermediary in Northern Ireland to be banned, but the complaints against him are the most serious so far.
Anyone keeping a close eye on the banning orders issued by the FSA will not be surprised at this latest case.
In recent months many other mortgage brokers have been found to have acted recklessly, stupidly and, in some cases (but not Heaney’s), dishonestly.
Some brokers have been party to mortgage fraud — to such an extent that some created falsified pay records for clients.
Heaney himself was found to have maintained weak records and security systems that could have enabled mortgage fraud to have been committed by others.
Sadly Heaney is not alone — the Government’s Serious Organised Crime Agency has warned that IFAs are particularly vulnerable to threats of organised crime.
The previous occasion when a Northern Ireland mortgage advisor was banned was when a Londonderry firm was found to have failed to prevent mortgage fraud.
Two years ago, Jack Keay, trading as Jack Keay Mortgage Services, was banned because, despite his being a small business, he did not operate basic controls over the firm’s trading practices.
At the time, Jonathan Phelan, head of retail enforcement at the FSA, said: “Jack Keay’s business was used to commit mortgage fraud. We identified many individual failings in what is a very small mortgage broker business.
“When concerns about mortgage fraud were drawn to his attention by a lender he delegated the task of following this up to his appointed representative and never thought to check on the outcome or make changes to his systems.
“After the FSA showed him examples of types of falsified documents submitted to lenders through his business, he still failed to demonstrate that he understood the risks.
“We do not and will not allow people who lack a basic level of competence and capability to perform controlled functions at authorised firms, especially where they are effectively facilitating financial crime.”
Other advisors have done worse: they did not simply fail to prevent crime, they committed it.
Three financial advisors were last month imprisoned after they were found to have carried out a VAT fraud that stole nearly £2 million from taxpayers in an operation that involved setting up 15 bogus companies that were supposed to be trading in various parts of England and Scotland.
The message here is that consumers need to be very careful who they trust when seeking any sort of financial advice.
It is an occupation where anyone can claim to be a ‘financial advisor’, just as unfortunately anyone can call themselves an ‘accountant’ — without necessarily having any qualifications or skills.
It makes sense to use a ‘chartered’ or ‘certified’ accountant — and it makes equal sense to opt for a ‘chartered’ or ‘certified’ financial planner.
Being chartered or certified signifies that a person has passed exams that demonstrate expertise in the subject. Financial advice should be the preserve of professionals — often it is not.
Stephen Lansdown, co-owner and co-founder of Hargreaves Lansdown, one of the most highly regarded IFA and brokerage firms, once said: “Huge numbers of financial advisers are incompetent.”
Lansdown has a vested interest, but it is a fair verdict — as were the FSA’s comments about Heaney, by the look of it.
It is a timely warning about whom to take financial advice and guidance from.