THE UK'S financial watchdog has banned a Northern Ireland-based mortgage broker for failing to prevent mortgage fraud.

Derry-based John Paul Keay, who traded as Jack Keay Mortgage Services, has become the first broker in the North to be struck off by the Financial Services Authority (FSA) and banned from offering financial advice.

The FSA introduced the ban on Keay because it said he was "not competent or capable to perform" any function related to regulated activities including giving advice.

According to the financial watchdog Keay ran a relatively small mortgage broker business in the North but this did not prevent him from ensuring that the business was not targeted by mortgage fraudsters. An FSA investigation discovered that John Keay Mortgage Services had no systems, controls or oversight arrangements in place. As a result his firm was used by fraudsters to submit mortgage applications which contained false information and which were in turn supported by falsified pay slips, bank statements and employer references.

No details of the level of finance obtained by mortgage fraudsters through Jack Keay Mortgage Services, or of the particular lenders who were affected, have been released.

The FSA investigation was initially launched after a lender, who had misgivings about John Keay Mortgage Services contacted the financial watchdog.

The FSA said the lender in question stopped doing business with the Derry company and the financial watchdog informed John Keay Mortgage Services about the potential nature of the fraud.