10Mar

FCA declines credit broking authorisation application over competence and other concerns

Concerns over his competence, as well as the extent to which his new entity was linked to his previous firm, have led to the Financial Conduct Authority refusing an application from a sole trader who was seeking credit broking, debt counselling and debt adjusting permissions.

The individual’s previous car sales business had its permission to conduct regulated consumer credit activity cancelled by the FCA in January 2018. This action was taken after the firm failed to submit the Consumer Credit Return 007 to the regulator.

To heighten the FCA’s concerns, Companies House records currently show that this firm’s accounts are more than one year overdue.

In his authorisation application, the individual proposed that his new regulated entity would use the same trading name as his previous firm and would operate from the same address.

He later indicated that he was prepared to change the name of the previous firm, but it later transpired that the name was simply changed back to the one previously in use less than one month later. Clearly, to have two entities in existence at the same time, could give riser to confusion amongst potential customers, especially if authorisation was now to be granted to one of these entities.

The FCA also noted that the new entity would use the same accountant as the previous firm, which gave rise to concerns as to whether data returns would indeed be submitted in a timely manner in the future.

The regulator then uncovered a significant concern relating to the individual’s competence and regulatory knowledge, when it reviewed the individual’s business website and discovered that he was communicating financial promotions relating to car finance even though he was not FCA authorised. The individual told the FCA that he was unaware that he required regulatory permission to do this, and that he believed he was doing nothing more than passing on the details of customers who made finance enquiries.

The FCA’s Final Notice concludes:

“The Authority’s concerns regarding the Authority’s ability to supervise [name of individual] effectively are heightened by the fact that [name of individual] appears to be seeking authorisation under similar organisational arrangements as were in place for [name of firm] and where [name of firm]’s Companies House returns are significantly overdue. In addition, the Authority considers, based on its conversations with [name of individual], that he continues to fail to understand that the submission of regulatory returns is the responsibility of an authorised firm and that he cannot discharge this responsibility to third parties.”