FCA delivers record £1m fine to retail sole trader

The Financial Conduct Authority (FCA) has fined sale and rent back arranger Gurpreet Singh Chadda £945,277 and banned him from working in the financial services industry.

Chadda was based in Birmingham, trading under the names Red2Black Homes and B&L Homes. The FCA investigated his involvement in seven sale and rent back transactions between June 2009 and January 2010 and found serious failings in all of them. A sale and rent back transaction is an agreement where a home owner sells their home and then rents it back from the arranger so as to be able to carry on living in the home. Often people who sell their homes in this way are vulnerable as they are in financial difficulties and need to raise money to pay mortgage arrears and avoid imminent repossession.

The record fine came after the FCA found that Chadda had mislead the sellers of the properties, who were his customers, by saying that he would buy their homes when in fact the purchasers were other people. Chadda also claimed that the price sellers would get were based on independent valuations and misled sellers about the worth of their properties while charging grossly unfair and excessive hidden fees.

In three cases the sellers got less than half of the value of their property; in two of these three cases the seller only received 38% of the sale price of their homes. The FCA believes that Chadda received £695,277 from the seven transactions as a result of his misconduct, and that these charges were unfair and excessive. The penalty includes disgorgement of the whole of this sum.

Tracey McDermott, director of enforcement and financial crime, said:

Chadda’s misconduct is the most shocking we have seen from a home finance arranger. He is a disgrace to financial services. He deliberately misled his clients for his own personal gain and then repeatedly and cynically lied to the FCA. 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.”