On 6th November 2012 the Financial Services Authority (“FSA”) issued a Final Notice to Mr Ryan Burnside confirming that, further to a Decision Notice given on 3rd October 2012, a prohibition order (the “Order”) has been made pursuant to s. 56 of the Financial Services and Markets Act 2000 (“FSMA”). The Order prohibits him from performing any function in relation to any regulated activity carried on by any authorised person, exempt person or exempt professional firm. The Order took effect immediately.
On 5th December 2011, Mr Burnside admitted obtaining money by fraud and as such was convicted at Stirling Sheriff Court of one count of fraud. Mr Burnside told a client that he had invested her life savings overseas when he had in fact used the money to fund his gambling addiction (as reported by the BBC). It is reported that his fraud was uncovered after his client’s son found out that Mr Burnside was not permitted by the FSA to work as an independent financial advisor following his dismissal from previous employer Albannach (now part of Towergate Financial).
Mr Burnside was sentenced to two years and four months imprisonment on 11th January 2012 after the sheriff told him he had carried out a “gross breach of trust”.
Following Mr Burnside’s conviction, the FSA has determined that he is not a “fit and proper person” to perform regulated activities “as his conduct demonstrates a lack of honesty and integrity”.
A criminal conviction is, in most circumstances, going to affect an individual’s permissions with the FSA. There are some convictions which may not affect an individual’s FSA authorised status if they are fully disclosed to the FSA (i.e. minor road traffic offences). However, failure to disclose a conviction to the FSA will be a factor which would be taken into account, if it later came to light, when assessing whether an individual is fit and proper to be, or continue to be, an authorised person. A criminal conviction which may not have had any impact on an authorisation status may in fact lead to a similar prohibition order as that which has been made in the case of Mr Burnside.
A conviction for fraud will undoubtedly mean that an individual is banned from carrying out regulated activities in the future. The nature of the offence is such that it would be impossible to demonstrate honesty and integrity to a level which is sufficient for authorisation to be obtained or continued. Individuals who are granted permission to engage in regulated activities hold a position of trust. Members of the public expect to be able to have a certain level of trust when it comes to dealing with authorised financial advisors; and rightly so. They are responsible for advising individuals on financial matters, handling monies provided by those individuals and for managing and handling their investments.
The FSA’s statutory objectives include the reduction of financial crime and the maintenance of confidence in the UK financial system. Where evidence is clear that a serious criminal offence has been committed, which undermines the honesty of an authorised individual, it is only right that the FSA take swift and decisive action such as it has in this case.