The High Court has ordered a “sham” broker and rentback scheme operator to pay £4m for exploiting vulnerable borrowers who were at risk of repossession.

One aspect of the scheme also involved misleading two legitimate lenders – Together and Lendinvest.

The FCA secured the order against London Property Investments, NPI Holdings, Daniel Stevens – the director of both firms and his father Tony Stevens.

It says LPI arranged mortgages and NPI bought properties and rented them back to the sellers even though neither had FCA authorisation.

In his judgement, Mr Justice Fancourt said the breaches amounted to “serious contraventions, conducted over an extended period, involving high levels of culpability including deception of the consumers and the lenders, and which took advantage of the consumers’ vulnerability.”

The FCA must now try to recover funds before any compensation can be paid to victims.

In 2020, the regulator secured an interim injunction freezing 17 residential properties worth approximately £3.9m and the defendants’ other assets up to £867,770.

LPI is required to remove restrictions registered against the titles of four properties. These restrictions were used to force individuals to pay “exorbitant” fees to LPI.

If these fees were not paid, then the individual could not sell or remortgage their home, which meant some were left trapped on high cost bridging loans.

FCA executive director of enforcement and market oversight Steve Smart says: “These sham brokers preyed on vulnerable people who were struggling financially and trapped them with exorbitant fees.

“The defendants used a smokescreen of deception which cost consumers and lenders dearly.

“This was a complex case, but the ruling shows that these were serious breaches of our rules.

“It is only right that we can now pursue LPI, NPI, Daniel and Tony Stevens to compensate for the losses they caused the victims.”

More to follow…