The FCA has confirmed that the director of three debt management firms, Debts Reduced Limited, Linked Finance Limited and another firm in the director’s own name, was sentenced for fraud by abuse of position, at Cardiff Crown Court on Friday 8 April 2016. The director was sentenced to 15 months in prison (suspended for two years) and 200 hours of community service. The case was brought by South Wales Police following its own investigation, in liaison with the FCA.
The FCA provided a witness statement setting out the allegations against the director, which included:
- The director allegedly charged customers £10 per month for an additional product, referred to as a ‘Cover Plan’. The director claimed that this product provided help to customers if their circumstances changed and they were subsequently unable to make payments into their debt management plan, and therefore to creditors.
- The director was unaware of any contractual basis on which any of the customers consented to this service and was also unaware of any documentation or correspondence initially used to make customers aware they were paying into, or had access to, the service.
- The director restricted the FCA permissions held and agreed that the firms would cease engaging in new debt management business, as requested by the FCA. The restriction took effect on 21 May 2014.
- The director also agreed to the FCA's request to wind down the firms in an orderly manner and to focus on returning monies (including those monies accumulated as part of the cover plan) back to the relevant customers.
- On 20 February 2015, having been satisfied that the director had returned all the monies to the relevant customers, the firms' interim permissions were cancelled.
The FCA has reinforced the fact that on becoming aware of potential criminal activity in the market it regulates, it will work closely with the relevant law enforcement agencies.