On June 19 2014, the Financial Conduct Authority (FCA) announced that it had refused an application for authorisation from Paul Catterall. Mr Catterall had intended to offer insurance advice and other mediation services under the trading name Deal Direct Insurance Bureau in the Bolton area.
The refusal of the application was due to Mr Catterall’s failure to disclose previous convictions, concerns over his level of experience and deficiencies in his financial situation.
Any firm or individual considering applying for FCA authorisation is advised to read the judgement made regarding Mr Catterall, as it provides an excellent example of some of the issues which are likely to be viewed unfavourably by the regulator.
Mr Catterall said on his application he had no previous convictions, in spite of having signed an accompanying declaration acknowledging that it may be a criminal offence to make a false declaration. In fact, he has a criminal history spanning a 29 year period, with many of his 17 offences relating to dishonesty. Previous criminal convictions do not automatically prevent an application being accepted, but the FCA will regard any non-disclosure as a very serious matter.
Mr Catterall also claimed to have over 20 years’ experience in the insurance industry. However, whilst the FCA did not doubt this assertion, the applicant himself admitted that he had not worked in this area since 1996, and in the intervening period, the regulatory landscape has changed considerably. In its Final Notice, the FCA said it was “not satisfied that Mr Catterall has relevant and up to date experience to advise on general insurance.”
Another key area of concern was that the FCA was not satisfied that Mr Catterall had adequate financial resources. When asked for a breakdown of his personal assets and liabilities, he merely provided a valuation statement relating to some items of jewellery.
Mr Catterall also failed to provide a business plan, or any financial forecasts, such as a cash flow forecast and projected balance sheets and profit and loss accounts.
On January 31 2014, the FCA issued a Warning Notice to Mr Catterall, informing him that they were minded to refuse his application, and giving him the chance to respond to their concerns. The FCA never received a response to this Warning Notice, and Mr Catterall did not refer the subsequent refusal of his application to the Tribunal.
In summary, Mr Catterall did not demonstrate that he met the FCA’s Threshold Conditions – a set of basic requirements all regulated firms must meet.
These conditions include:
- To have a head office and registered office in the UK
- To be established as a body corporate, or as a partnership or sole trader
- Not to have close links with another organisation that would prevent the FCA supervising the firm adequately
- To maintain adequate resources
- To have a business model that promotes both the interests of consumers and the integrity of the UK financial system
- To be fit & proper – assessment may cover areas such as: any previous dealings with regulators; the quality of internal systems & controls; the skill levels present within the organisation; and the financial crime risk posed.
Firms and individuals who wish to become authorised are urged to read the Getting Authorised pages on the FCA website. Potential applicants need to start preparing the required information well in advance.