26Jan

Individuals and firms suspected of conducting financial services activity without authorisation can expect to have a warning notice to this effect posted on the Financial Conduct Authority (FCA)’s website. However, the consequences can sometimes be much more severe, as was illustrated in mid-January 2017 when the FCA announced that it had initiated its first prosecution against an individual alleged to have conducted consumer credit activities without the necessary regulatory permissions.

If found guilty, Dharam Prakash Gopee could face up to two years’ imprisonment, and/or a fine.

The FCA alleges that London-based businessman Mr Gopee has lent more than £1 million over the last four years, whilst never having been authorised by the FCA or the previous consumer credit regulator, the Office of Fair Trading (OFT) during this period.

He is said to have acted as ‘lender of last resort’ and to have registered charges over borrowers’ homes enabling him to take possession in case of default.

Companies Mr Gopee has been involved with include Reddy Corporation Ltd, Speedy Bridging Finance Ltd and Barons Finance Ltd. As a result of issues relating to the liquidation of Barons, he has already been disqualified from acting as a company director for a period of 15 years.

In 2011, the OFT refused to renew the consumer credit licence of Reddy Corporation, and refused a new application from Barons Bridging Finance 1 Limited. Both decisions were subsequently upheld by the First-Tier Tribunal (Consumer Credit).

Mr Gopee has already appeared at Westminster Magistrates Court charged with offences under both the Consumer Credit Act 1974 and the Financial Services and Markets Act 2000. On February 14 2017 he will have a Plea and Trial Preparation Hearing at Southwark Crown Court, ahead of a trial later in the year, unless he was to plead guilty.

The law in this respect is unambiguous, in that no activity which is overseen by the FCA can be conducted without obtaining authorisation. Conducting unauthorised activity in financial services is a criminal offence. In the consumer credit sphere, firms must ensure they apply for the correct permissions – for example firms must state whether they are applying for authorisation to act as a lender, broker, debt counsellor, debt adjuster, dent collector, etc.

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.