The Financial Conduct Authority (FCA), the financial regulator in the UK, has banned and fined rent back arranger Gurpreet Singh Chadda close to £1 million.

Chadda has been fined £945,277 for allegedly misleading vulnerable customers for personal gain and has been banned from working in the financial services industry for significant failings when conducting sale and rent back agreements. This is the largest ever fine for a single trader in a retail business.

Chadda was based in Birmingham, trading under the names Red2Black Homes and B&L Homes. 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 his/her home and then rents it back from the arranger so as to be able to carry on living in the same property.

Chadda allegedly misled the sellers of the properties, who were his customers, by telling them he would be buying their homes when in fact the purchasers were other people. As per the allegations, he was also misleading the sellers about what their properties were worth and charging the sellers grossly unfair and excessive hidden fees.

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 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.”

In two cases he reduced the sellers’ share of the sale money by misleading them about the value of their property, and in one case he exaggerated the legal costs that the seller had to pay, to further reduce the amount the seller received.

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 per cent 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.

(Edited by Joby Puthuparampil Johnson)

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