In one aspect of their scheme, the defendants used finance from two legitimate lenders – Together and Lendinvest – misleading the companies into believing they were lending on buy-to-let properties.

Under the name “LPI Emergency Property Finance”, a trading name of LPI, desperate borrowers were offered quick refinancing in order to try and stay in their homes.

But it was not clear what they were signing up to, the fees they were paying or that the companies would be putting restrictions on the property title.

The judge said some of the borrowers were encouraged to sign fake tenancy agreements, to provide another address as their residence and to tell any property valuers visiting their home that they did not live there.

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 even though they did not have FCA authorisation.

Bogus buy-to-let and sale and rentback

Because the borrowers were intending to stay in their homes, the mortgages should have been regulated residential contracts, but were in fact unregulated investment loans.

In another aspect of the scheme NPI bought properties and rented them back to the sellers.

The FCA has been clamping down on unregulated sale and rentback for more than a decade.

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.”

Freezing the money

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.

In November 2022, the FCA obtained a judgement against LPI, NPI and the father and son in relation to 45 individuals.

Today’s judgement relates to 26 individuals, bringing the total number of homeowners affected by both rulings to 71.

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.

‘Preying on the vulnerable’

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.”

Last week the FCA revealed that another allegedly unauthorised broker had been charged with fraud.