A London-based firm that was authorised by the Financial Conduct Authority (FCA) has been stripped of its authorisation for failing to notify the regulator of some very serious issues that affect the firm and some of its key employees.
The FCA’s Supervisory Notice says that the firm’s permission has been “varied”, but then goes on to state that this variation of its permission has actually resulted in all of its regulatory permissions being removed, meaning that it can no longer conduct any FCA-regulated activity.
The firm, which held FCA permissions to carry out credit broking and debt management activities, sells high value and rare motor vehicles. Mr A – a manager at the firm – and Mr C – a salesperson in the firm’s employment – have been arrested by the National Crime Agency on suspicion of financial crime offences.
According to the FCA, the firm also submitted false documents to a lender in connection with applications for finance connected to the purchase of high value vehicles. In summary, the FCA says that the firm “has put itself at risk of being used for the purposes of financial crime or of being otherwise involved in crime.”
As justification for its actions, the FCA says that the firm is in breach of Principle 11, which requires all authorised firms to disclose to the FCA “anything of which they would reasonably expect notice”. It adds that the firm has also breached the notification requirements in Chapter 15 of the Supervision (SUP) section of the Handbook, and that it was necessary for the FCA to act “so as to further the Authority’s operational objectives of protecting consumers and enhancing the integrity of the UK financial system”.
SUP 15.3.1R requires firms to inform the FCA immediately if they become aware, or have reason to believe, that:
- They are failing to satisfy one or more of the threshold conditions; or
- An issue has arisen which could affect the firm’s ability to service its customers and which could result in serious detriment to a customer of the firm; or
- An issue has arisen which could have significant adverse impact upon the firm’s reputation
In this case, it is the last of these – damage to the firm’s reputation – which is most likely to occur following the arrest of these two individuals for serious offences. In spite of this, the FCA says that it was never notified of the matter by anyone at the firm.
All regulated firms need to be aware of their duty to disclose important information to the FCA without delay.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article