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Financial services investigations and enforcement monthly round up - January 2020

Recent enforcement actions and investigations in the financial services sector

Managing Director fined by FCA for failure to notify personal trades

The FCA has fined former Managing Director at Braemar Shipping Services plc (Braemar), Kevin Gorman, £45,000 for failure to notify personal trades.

Under the Market Abuse Regulations, persons who are Persons Discharging Managerial Responsibility (PDMRs) and those closely associated with them are required to notify the FCA and the issuer of every transaction conducted on their own account above a certain threshold within 3 business days.

Mr Gorman, in his capacity as a PDMR at Braemar, was found to have sold shares worth a total of over £71,000 on 3 occasions over the course of 6 months without informing Braemar or the FCA within the 3 business days, as required.

Mr Gorman’s agreement to assist in resolving the matter qualified him for a 30% discount on his penalty, reducing the fine to £45,000.

FCA fines claims management company £91,000

On 21 January 2020, the FCA fined claims management company Hall and Hanley Limited (HHL) £91,000.

The FCA found that HHL had breached the Conduct of Authorised Persons Rules 2014 in relation to misleading consumers to claims and unfair treatment of consumers in the claims management sector.

HHL was found to have negligently failed to take reasonable measures to avoid purchasing marketing leads (in breach of PECR 2003) and by negligently failing to prevent one of its employees from copying customers’ signatures without their consent.

Upper Tribunal strikes out application by P.F. International to challenge FCA regulatory decision

The FCA found that staff of P. F. International conducted door-to-door cold call visits and high-pressure sales techniques with vulnerable consumers, in contravention of a requirement on its permissions and the FCA’s principle of treating customers fairly.

The FCA also found that the firm failed to carry out adequate affordability checks on customers’ ability to repay credit and entered into credit agreements even though customers told them the firm they could not afford to pay.

The Upper Tribunal struck out the firm’s final appeal. As a result of the decision P.F. International will no longer be allowed to conduct any regulated activity, including recovering any regulated debts owed to it.

This case is also an example of the FCA working with other bodies to gather evidence, in this case, Bristol Trading Standards and the National Trading Standards South-West Regional Investigation Team.

Evaluating a compliance programme – new SFO Guidance

The SFO has this month released new guidance as part of its internal Operational Handbook, which shines a light on how it assesses the companies it investigates. It is not intended to be relied on for the basis of legal advice, but gives some insight into the SFO’s approach to investigations of compliance programmes.

The document sets out the time periods relevant to decisions and highlights the need to consider the past, present and future state of a company’s compliance procedure at different stages of the investigation.

The SFO also reiterates the six principles set out in the 2011 statutory guidance to the Bribery Act as a good general framework for assessing compliance programmes. The six principles are:

  • Proportionate procedures
  • Top-level commitment
  • Risk assessment
  • Due diligence
  • Communication and training
  • Monitoring and review

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2020. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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