Record fine for home finance trader
Birmingham-based Gurpreet Singh Chadda, who traded under the names Red2Black Homes and B&L Homes, was banned from working in the financial services industry and fined £945,277 by the Financial Conduct Authority (FCA) in the largest ever penalty for a sole trader.
The FCA said Mr Chadda, who arranged for clients to sell properties and lease them back to carry on living in their homes, deliberately misled homeowners for his own gain and lied to the FCA. He falsified valuations to deceive homeowners that their properties were worth less than their real value - in some cases sellers received just 38% of the true sale price of their homes, according to the FCA.
Sale and rent back deals are often used by vulnerable homeowners who are in financial difficulties and need to raise money to pay mortgage arrears and avoid imminent repossession. The FCA estimates Mr Chadda pocketed nearly £700,000 from the seven deals it investigated between June 2009 and January 2010.
"Mr Chadda is not fit to work in regulated financial services and he presents a serious risk to customers and lenders alike with his dishonest and unscrupulous actions. The unprecedented level of the fine for a sole trader reflects our determination to deprive him of the gains he made as a result of his misconduct."
The FCA said he also told clients that he would be buying their homes, when the purchases were made by other people, while further misleading mortgage providers unaware that the deals were sale and rent back transactions.
Although the sellers expected to get a discounted price for their properties, they were often charged "grossly unfair and excessive hidden fees" and were also unaware that Mr Chadda was receiving the full price for the properties from the purchasers.
He also made false and misleading statements to the FCA, failed to disclose relevant documents and information and created misleading documents. The FCA said he even arranged for people to impersonate his customers in an attempt to mislead the regulator.
The case has been referred to West Midlands Police.
© 2013 Press Association