Subprime mortgage broker Moneyzone fined €65k
Central Bank imposes sanction for multiple breaches of the rules
ONE of the largest mortgage brokers during the boom has been fined €65,000 by the Central Bank for failing to act in the best interests of its customers.
Moneyzone, a subprime division of the Irish Mortgage Corporation, did not gather enough information about its customers when it was arranging mortgages for them. Irish Mortgage Corporation was the largest broker during the property boom, arranging €1bn worth of mortgages at one stage.
The broker failed to deal properly with complaints and keep its record up to date, the Central Bank said.
The breaches occured between July 2007 and October 2008.
In a statement, the regulatory authority said that Moneyzone was also guilty of not telling its mortgage customers there was an arrangement fee for the mortgage and that interest would be charged on this from the bank that was providing the home loan.
In a litany of complaints, the Central Bank also found that the broker did not retain a written statement setting out why it had concluded that the product was suitable for the customer, as is required under the rules.
"The firm failed to retain, in some instances, a copy of a written statement, setting out why the product recommended was suitable or the most suitable for consumers," the Central Bank said yesterday.
Moneyzone, which stopped trading in 2008, also got in trouble for failing to ensure that its staff achieved minimum competency requirements between 2007 and 2008.
The Central Bank conducted a number of on-site inspections of the Moneyzone, reviewed customer documentation and conducted interviews with affected customers.
It also spoke to former employees and third-party lenders who provided the underlying subprime mortgage products.
Subprime mortgages had some of the highest interest rates during the boom.
They were only taken up by those unable to borrow from mainstream banks because they had a poor credit history or were self-employed for less than three years.
Many of those now deeply in arrears took out mortgages from subprime lenders.
Often they consolidated other debts into a new and larger mortgage.