The Financial Conduct Authority (FCA) has refused an application from a Manchester-based debt management firm, and the regulator says that the firm adopted an uncooperative attitude throughout the application process. The firm had been authorised by the Office of Fair Trading (OFT) prior to 2014, and had been trading since 2003, which illustrates that the FCA regime is much stricter than that of the OFT.
The FCA says that:
- The firm used a forceful and argumentative manner to query why it was necessary to provide information in support of its application
- The firm was reluctant to provide information and to comply with FCA rules and other legal requirements
- The firm was uncooperative and hostile when the FCA provided feedback on information provided in support of the application
- The firm was also uncooperative and hostile when complying with requests made by the FCA
As a result of these issues, the FCA was concerned that:
- It would not receive adequate information from the firm to enable it to determine whether the firm is complying with regulatory requirements
- The firm was not fit and proper, as it had not demonstrated that it would be open and cooperative in its dealings with the FCA, or that it was willing to comply with regulatory requirements
- The firm does not have sufficient human resources that are able and willing to understand the regulatory system, and to ensure that the firm complies with regulatory requirements
On one occasion, the firm’s director told an FCA employee in a telephone conversation that “we don’t even know what CONC is”, and when the employee then directed him to Policy Statement 14/3, the director said it was “another item we were not aware of”. PS 14/3 is the Statement that includes the final FCA rules for consumer credit firms and was published in February 2014, giving firms more than one month to study the rules and ensure they were compliant. The director still however maintained throughout this call, made in August 2016, that the FCA had not made him aware of the rules he needed to follow, even though by this time it was more than two years since the CONC section was added to the FCA Handbook.
When the FCA sent an email to the director asking for a three-year financial forecast, he instead replied by saying the FCA was “bent” and “unable to police the industry”, and said he would not provide the financial information until the FCA had provided him with a rulebook, so even in February 2017 he was maintaining that the regulator had not made his firm aware of the rules they needed to follow.
When the FCA highlighted the need for the firm’s website to contain a prominent link to the Money Advice Service site, the director replied by saying he would only do this once other firms in the industry had complied with the requirement.
The firm appealed against the FCA’s decision to refuse its application, but the Tribunal agreed with the regulator. Its decision stated that:
“We find that at the heart of the difficulties caused for the Authority in this case was the failure, right from the outset of the Application, of [name of the sole director of the firm] to understand that it was primarily his responsibility to familiarise himself with the Authority’s regulatory requirements and ensure that he could satisfy the Authority that [name of firm] was in a position to meet them.
“In this case, we find that [name of director]’s whole approach was not to cooperate with the Authority but to attempt to get it to deal with his firm differently
“[name of director]’s approach … was to demand that he be spoon-fed with particular requirements relevant to his firm. It was clear that he had taken no steps to familiarise himself with the relevant regulatory requirements, which [name of firm] had been obliged to comply with since the date of [name of firm]’s interim permission.”
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