It is rare for the FCA's objection to a change of control notification to ever become public. Acquirers usually discreetly withdraw their notification once the FCA's opposition is made clear to them. As such the recent publication by the FCA of a Final Notice, which outlines the reasons why it had decided to object to the acquisition of a 33% controlling interest in Ubiety Wealth Management Limited by Lynda Croome, gives an interesting insight into the change of control process and the FCA's approach.
In the Final Notice the FCA outlined that it had concluded that it should object to Ms Croome's proposed acquisition on the basis of her lack of integrity. This lack of integrity was found because Ms Croome made non-disclosures and provided partial disclosure in the Notification to the Authority in regard to her previous conduct at regulated firms.
A Decision Notice relating to this matter was issued to Ms Croome in March, by the Regulatory Transactions Committee (RTC). The RTC unlike the Regulatory Decisions Committee (RDC) is made up of individuals from within the FCA. In matters concerning applications for authorisation or approval the RTC makes the decision whether or not to issue a Warning Notice to a subject who is contesting a relevant authorisations or approvals decision. If the subject decides to contest the Warning Notice their representations are then considered by the RDC which will decide whether or not to issue a Decision Notice. However in change of control cases the RTC decides the matter at both the Warning Notice and the Decision Notice stage.
Having had her case decided by the RTC Ms Croome then referred the matter to the Upper Tribunal in April 2015. However she subsequently sought to withdraw her reference to the Tribunal in June. The Tribunal consented to her withdrawal of the reference in July. The FCA was then obliged to give Ms Croome a Final Notice of its decision having decided to refuse the Notification and the Tribunal reference having been withdrawn. It is not apparent why this Final Notice was only given approximately 6 months after her reference was withdrawn.
The FCA explained in the Final Notice that it had concluded that Ms Croome lacked integrity because she had "lacked candour" when submitting her change of control notification (as well as in an earlier application for approval as a director of the firm). As is often stressed by the FCA, issues of non-disclosure raise serious concerns about the relevant individuals and so it was with Ms Croome.
Ms Croome was criticised for three material non-disclosures which were said to have been persisted through the process. The first of these concerned her characterisation of her departure from one former employer. She stated in the Notification form that she had resigned from this employer, whereas the FCA concluded that after allegations had been made against her she had been suspended and then dismissed. Interestingly the FCA had decided not to explain what these allegations were suggesting that there were either ultimately demonstrated to be specious or they were not actually relevant to an assessment of her character.
The third of the non-disclosures arose not from the change of control notification but from an earlier application for approval. The FCA criticised Ms Croome for stating in the form submitted that she was to become a director of Ubiety in June 2014 when in fact Companies House had been notified that she had been appointed as a director approximately 4 months earlier (in February 2014).
Whilst the FCA did not state whether it would have been minded to have objected to her application had it only been faced with one of these three non-disclosures, this Final Notice does make plain the seriousness with which the FCA treats non-disclosure. The FCA expects both those seeking to enter the regulated sector and those already within it to demonstate candour in their dealings with it.