The Financial Services Authority has fined American bank Goldman Sachs £17.5 million for breaching FSA principles in alleged mortgage fraud claims.

It’s one of the largest fines ever sanctioned by the FSA and the regualtor claims that Goldman Sachs should have declared it was under investigation in the US for selling a sub-prime mortgage funds it thought could collapse before the credit crunch hit. The increase in mortgage fraud is been widely reported in the UK across the intermediary market.

Royal Bank of Scotland was one of many investors caught out and Goldmans had to pay £356 million to US regulators in July.

The latest fine relates to London-based Goldman Sachs Internationals’ failure to ensure that it had in place adequate systems and controls to enable it to comply with its UK regulatory reporting obligations. Recently a broker was fined £31k for Mortgage fraud.

In particular, the bank did not have effective procedures in place to ensure that its compliance department was made aware of the investigation so that it could consider whether any notifications needed to be made to the FSA.

Margaret Cole, managing director of enforcement and financial crime, said:

“We have repeatedly stressed the importance of firms self-reporting regulatory issues to the FSA in a timely way.

The FSA investigation found that Goldman did not deliberately withhold any information from the FSA. Goldman co-operated fully and agreed to settle at an early stage. In doing so it qualified for a 30% discount. Without the discount the fine would have been £25 million.

Have you been the victim of mortgage fraud? You may be entitled to compensation, take the test.