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					                                                                   Kinetic Partners

                                                                  REGULATORY
Financial Services Authority developments, news and publications issued in JUNE 2010                                Issue 26




Welcome to Kinetic Partners’ latest ‘regulatory focus’, our regulatory newsletter for the asset
management community. It provides a synopsis of the Financial Services Authority’s (FSA) latest
news and publications on a monthly basis.

Highlights in June include the largest fine ever imposed by the FSA; (£33.32m levied on JP Morgan
Securities Ltd), the fining and banning of a broker for market abuse and a speech on the FSA’s
approach to consumer protection.

Our newsletter can also be accessed from our website: www.kinetic-partners.com

As your views are important to us, we would value your comments and suggestions.
Please send these to info@kinetic-partners.com




Contents                                                           Highlights

Press releases                                   2                 FSA fines and bans oil futures broker
                                                                   for market abuse                                          2
Policy statements                                5
Statements                                       5                 FSA levies largest ever fine of £33.32m on
                                                                   J.P.Morgan Securities Ltd for client money breaches       2
Consultation papers                              5
Discussion paper                                 6                 FSA consults on changes to
                                                                   the existing training and competence regime               2
Handbook publications                            6
Newsletter                                       6                 FSA demands tough standards from firms dealing
                                                                   with arrears and sale and rent back customers             4
Speeches                                         6
Miscellaneous                                    7                 High Court orders Pruthi, Anderson and
                                                                   Peacock to pay £115m to the FSA                           5
Final notices                                    7
Supervisory notices                              8                 FSA’s approach to consumer protection                     7
Complaints against the FSA                       8




     Details of all FSA publications can be found at: http://www.fsa.gov.uk/Pages/Library/Publications_by_date/index.shtml
 Kinetic Partners

REGULATORY                                           PASSION for our work
                                                     Core values lie at the heart of our people and our business


Press releases                                           FSA v Andrew King and Michael McFall                      FSA discovered that 18 regulated mortgage
                                                         FSA/PN/090/2010                         03 June 2010      applications had been completed and at least
                                                                                                                   48 submitted within the relevant period. The
FSA fines and bans commodity broker                      The FSA brought a case against Andrew King
                                                                                                                   FSA concluded that Mr Masi was not a fit and
for market abuse                                         and Michael McFall for insider dealing. The jury
                                                                                                                   proper person and banned him from working
FSA/PN/088/2010                  02 June 2010            at Southwark Crown Court acquitted both
                                                                                                                   in the financial services industry.
                                                         individuals.
The FSA found that Charles Edward Kerr had
deliberately manipulated the market in London            Andrew Rimmington was also on trial on the
                                                         same charges but Judge Testar discharged the              FSA fines Rowan Dartington & Co Ltd
International Financial Futures and Options
                                                         jury from considering the case against him                £511,000 for client money breaches
Exchange (LIFFE) traded coffee futures and the
related coffee future options, for the intended          midway through proceedings, for personal                  FSA/PN/093/2010                    7 June 2010
benefit of his client. Mr Kerr executed trades           reasons. Given the verdicts against Mr McFall,            The FSA found that Rowan Dartington &
during a key one minute period of trading in             the FSA has offered no evidence against Mr                Co Ltd (Rowan Dartington) had failed to
order to artificially increase the price of coffee       Rimmington and not guilty verdicts have been              adequately protect and segregate client money,
futures. Mr Kerr was successful in manipulating          entered in respect of him.                                for a period of two years. In May 2007, Rowan
the market, although his client did not make the                                                                   Dartington had installed new software but failed
intended profit and Mr Kerr’s financial benefit          FSA consults on changes to the existing                   to properly test and implement it, resulting in
was limited to his commission on the trades.             training and competence regime                            a breakdown in the reconciliation processes.
However, this did not diminish the seriousness                                                                     The resulting problems meant that Rowan
                                                         FSA/PN/091/2010                          4 June 2010
of his market abuse.                                                                                               Dartington could not rely upon the accuracy
                                                         The FSA has published proposals for enhancing             of its own internal books and records, and so
Mr Kerr also provided false and misleading
                                                         its competence requirements for individuals               could not be confident that it was segregating
information to the FSA during the course of its
                                                         carrying out retail activities, while placing more        the right amount of its clients’ money.
investigation. The FSA fined Mr Kerr £100,000
                                                         emphasis on standards of ethical behaviour.The
and banned him from working in financial                                                                           The FSA also concluded that Rowan Dartington
                                                         proposals include:
services.                                                                                                          had placed its clients’ money at risk by failing to
                                                         ■ a 30 month deadline for individuals to                  segregate client money for contingent liability
                                                           complete all modules of a qualification                 business, including spread bets and options.The
FSA levies largest ever fine of £33.32m                    required for their role;                                breaches were compound by the fact that they
on J.P. Morgan Securities Ltd for client
                                                         ■ the removal of some transitional provisions             took place during a period of market turmoil.
money breaches
                                                           which allow individuals to operate without
FSA/PN/089/2010                  03 June 2010              formal qualifications, due to arrangements
                                                                                                                   FSA fines Close Investments Ltd £98,000
The FSA found that between 1 November                      with their previous regulator; and
                                                                                                                   for client money breaches
2002 and 8 July 2009, JP Morgan Securities Ltd           ■ clarification on how individuals carrying out
failed to segregate the client money held by                                                                       FSA/PN/094/2010                    7 June 2010
                                                           approved       persons      roles     should
its futures and options business (F&O) with JP             demonstrate a good standard of ethical                  The FSA found that between January 2008 and
Morgan Chase Bank N.A. The error occurred                  behaviour. They will be expected to act in              January 2010, Close Investments Ltd had failed
following the merger of JP Morgan and Chase                the interests of their client, avoiding                 to hold client money in segregated accounts
and remained undetected for nearly seven                   consumer        detriment     and      taking           with trust status. These accounts related to a
years. Instead of the client money being held in           responsibility for their own level of                   number of unregulated collective investment
a segregated money market account, JP Morgan               competence.                                             schemes which it managed. Close Investments
Securities Ltd’s F&O client money was held in                                                                      Ltd was responsible for ensuring that all
                                                         The FSA also plans to publish lists of
an unsegregated account with JP Morgan Bank                                                                        periodic distributions were paid to investors.
                                                         qualifications in the Handbook that meet the
N.A.                                                                                                               In January 2008, a new process was put in
                                                         FSA requirements.
The FSA felt that this was a particularly serious                                                                  place, whereby the process for distribution
breach of the client money rules as JP Morgan                                                                      was outsourced. To facilitate the new process,
Securities Ltd is one of the largest holders of          FSA bans Swindon based mortgage                           distribution accounts were opened in relation
client money in the UK; during the relevant              broker for breaching a settlement                         to each fund, to pay the investors. Unfortunately,
period the client money balance varied                   agreement and lying to the FSA                            these accounts were not set up as segregated
between $1.9 billion (in December 2002) and              FSA/PN/092/2010                          4 June 2010      client money accounts with trust status and
$23 billion (in October 2008) and the breach             The FSA found that Joseph Masi, trading                   this error went undetected for two years.
went undetected for seven years.                         as Select Mortgage Services had breached                  Close Investments Ltd notified the FSA after
In working out the size of the penalty, the              a settlement agreement with the FSA and                   identifying the problem and agreed to settle at
FSA took into account that the misconduct                provide false and misleading information to               an early stage, qualifying for a 30% discount.
was not deliberate, the firm self reported               the FSA. The settlement agreement had been
upon discovering the issue, no clients lost any          entered into with Mr Masi, following an FSA
                                                                                                                   Former stockbroker charged for boiler
money and there was no incorrect financial               investigation into the systems and controls at
                                                                                                                   room related offences
by JP Morgan Securities Ltd for the period               Mr Masi’s firm and the suitability of the advice
between 2001 – 2008. The size of the penalty             provided to consumers. It required Mr Masi to             FSA/PN/095/2010                    8 June 2010
is equivalent to 1% of the average amount of             obtain sign-off from an external compliance               The FSA charged David Roger Griffiths Mason
unsegregated client money.                               consultant for mortgage sales for a period of             with five offences including making misleading
The FSA has recently established a new unit              six months from 3 September 2007.                         statements to investors, conspiracy to defraud
to enhance and strengthen it capabilities in             During an FSA visit to the firm in March 2009, Mr         and money laundering. These offences relate to
the area of client money and assets, and has             Massi presented the FSA with records showing              the suspected sale of shares to UK consumers
confirmed that it has several more cases in the          only one regulated mortgage application within            by boiler rooms between November 2008 and
pipeline.                                                the relevant period. Following further evidence           June 2009. Mr Mason has been bailed to attend
                                                         being obtained from mortgage lenders, the                 City of London Magistrates’ Court on 24 June 2010.


                                                                                                                                                                         2
 Kinetic Partners

REGULATORY                                           PASSION for our work
                                                     Core values lie at the heart of our people and our business


FSA takes action against two insurance                   FSA bans three individuals and fines two                  speech, on whether regulators should have a
brokers for failing to protect client                    of them for mortgage fraud                                greater role in judging firms’ culture. Mr Sants
money and assets                                         FSA/PN/099/2010                         16 June 2010      concludes that while many of the causes of the
FSA/PN/096/2010                   9 June 2010                                                                      financial crisis were deeply rooted in firms’
                                                         The FSA has announced that it has banned
                                                                                                                   behaviour, it is not for the regulator to define
The FSA took action against two insurance                John Charalambous of The Financial Associates
                                                                                                                   acceptable culture, rather for society as a
brokers, Delwyn Way of Shield Insurance                  Ltd (TFA), Richard Granville Greenland of
                                                                                                                   whole.
Consultancy Ltd and Adrian Shillaker of                  Guardian and Michael Adam Goldman formerly
Griffiths McAlister Insurance Brokers Limited,           trading as the Goldman Group, from working                The regulator was however, responsible for:
for failing to protect clients’ money and assets.        in the financial services industry. It also fined         ■ ensuring firms hire managers who act
Mr Way was fined £77,957 and banned from                 Mr Charalambous £294,500, Mr Greenland                      with integrity, by judging competency but
working in the financial services, for embezzling        £120,000 and would have fined Mr Goldman                    also ensuring they understand the need to
money from the client money account to fund              £102,158, had he not been declared bankrupt                 act with integrity, deliver the right culture
business and personal expenses.                          in November 2009.                                           and are equipped to do so;
Mr Shillaker has been banned from working in             Mr Charalambous advised a customer to                     ■ ensuring firms have the right governance
the financial services for knowingly transferring        remortgage their property to raise additional               and behavioural framework to facilitate
client money to Griffiths McAlister Insurance            money for a new property, increased the                     good judgement by their staff; and
Brokers Limited’s business account, to fund its          amount of the loan on the mortgage without                ■ assessing the actions against society’s wider
business expenses. Mr Shillaker also failed to           the customer’s knowledge or approval, and                   expectations not just shareholder value.
ensure client money was segregated from other            arranged to receive the additional amount into
funds, breaching the FSA’s Client Money rules.           his own bank account. In addition, he applied
The FSA has also cancelled the permissions of            for and set up insurance policies in the name of
Griffiths McAlister Insurance Brokers Limited.           customers, without their knowledge, to obtain             Photo-Me fined £500,000 for delay in
                                                         commission.                                               disclosing inside information
The FSA confirmed that it would have imposed
a financial penalty of £70,000, had he not               Mr Greenland submitted mortgage applications              FSA/PN/102/2010                   21 June 2010
demonstrated that it would cause him serous              on behalf of customers and himself which                  The FSA has fined Photo-Me International plc
financial hardship.                                      he knew contained false and misleading                    (Photo-Me) £500,000 for failing to disclose
                                                         information. He also failed to ensure that he             inside information to the market as soon as
                                                         and his company complied with FSA standards,              possible. This is the largest fine of its type that
FSA publishes annual report for the year                 including failing to maintain customer records            the FSA has ever issued.
2009/10                                                  and records of the suitability of advice given to
                                                                                                                   In September, November and December
FSA/PN/097/2010                  10 June 2010            customers.
                                                                                                                   2006, Photo-Me made announcements that
The FSA published its annual report outlining            Mr Goldman submitted fraudulent mortgage                  created an expectation in the market that
its performance against the priorities it set            applications for himself and three closely                it would benefit from the winning of large
out in its 2009/10 Business Plan and the FSA’s           related clients, inflating his own and clients’           minilab sales contracts and strong minilab sales
statutory objectives. It states that over the last       income, in order to secure mortgages.                     generally. These announcements were key in
three years it has transformed its approach to                                                                     underpinning its share price in the relevant
regulation and supervision. Key changes include:                                                                   period and were based, in part, in winning a
                                                         FSA Chairman welcomes Chancellor’s
■ a more intense approach to supervision of              plans for regulatory reform                               large contract with a US-based retailer (the
  high impact firms;                                                                                               Albertsons contract) for the sale of 200
                                                         FSA/PN/100/2010                         16 June 2010
■ an increased involvement in                 the                                                                  minilabs. Photo-Me recognised that in order to
                                                         Lord Turner, the Chairman of the FSA has                  meet the market expectations it had created, it
  International and European fora;
                                                         given his support to the changes to regulation            needed to sell around 1,100 minilabs between
■ a more aggressive pursuit to market abuse              outlined in the Chancellor of the Exchequer’s             November 2006 and April 2007.
  and inadequate management; and                         proposals. He felt the Chancellor’s proposals
                                                                                                                   On 17 January 2007, Photo-Me was informed
■ improving customer protection in retail                for prudent regulation will enable it to bridge
                                                                                                                   that it was one of five competitors for
  markets by earlier intervention.                       the gap between macro-prudential policy and
                                                                                                                   the Albertsons contract, this was inside
In light of the changes made over the last three         the supervision of individual firms and was
                                                                                                                   information which should have been disclosed
years, the FSA has needed to change internally.          glad that Hector Sants would be the first Chief
                                                                                                                   to the market.
It considers this to be its biggest achievement,         Executive of the Prudential Authority and a
                                                         Deputy Governor of the Bank of England.                   By 12 February 2007, Photo-Me had
which has changed its supervisory philosophy
                                                                                                                   information that its sales in January were 40%
and the capability to deliver it.                        He also stated that the new Consumer
                                                                                                                   behind budget and that revised forecasts were
For the full report please see: http://www.fsa.          Protection and Markets Authority will build on
                                                                                                                   predicting sales of only around 750 minilabs.
gov.uk/pubs/annual/ar09_10/ar09_10.pdf                   the work the FSA has recently been doing on
                                                                                                                   This was inside information which should have
                                                         retail consumer protection, while also focusing
                                                                                                                   been disclosed to the market.
                                                         on conduct issues in wholesale products.While
                                                         there are still issues surrounding enforcement            Despite being warned by its auditors that the
FSA appoints senior advisor                              activities and for those market activities which          sales target was challenging, it was not until
                                                         relate to exchanges, clearing infrastructure              Photo-Me’s next quarterly board meeting
FSA/PN/098/2010                  14 June 2010
                                                         and prudential issues, Lord Turner confirmed              that it considered the effect of the inside
The FSA announced that it has appointed                  that the FSA will be working closely with the             information and release a profit warning, which
Tom Boardman to the role of life insurance               government to consider different arrangements.            resulted in its share price closing 24% lower
senior advisor. Mr Boardman was previously a                                                                       on that day.
director of retirement strategy and innovation
                                                                                                                   In total the delay in disclosing the inside
at Prudential.                                           Should regulators judge culture?
                                                                                                                   information, led to a false market in Photo-Me’s
                                                         FSA/PN/101/2010                         17 June 2010      shares for 44 days.
                                                         The Policy Notice comments on Hector Sants’

                                                                                                                                                                         3
 Kinetic Partners

REGULATORY                                           PASSION for our work
                                                     Core values lie at the heart of our people and our business


FSA fines Vantage £700,000 for failing to                Mr Ahmad’s co-operation resulted in a                     FSA confirms list of retail distribution
prevent an individual from performing                    significant reduction to his sentence. He                 review adviser qualifications
a significant influence function without                 also agreed to a Final Notice requiring him               FSA/PN/107/2010                   28 June 2010
FSA approval                                             to pay £131,000 to the FSA, representing a
                                                                                                                   The FSA has published a list of qualifications
FSA/PN/103/2010                  21 June 2010            disgorgement of the profits he made from
                                                                                                                   which retail investment advisors will need to
                                                         regulatory misconduct, unrelated to the insider
Vantage, an interdealer broker, was formed                                                                         pass prior to 1 January 2013. It is also consulting
                                                         dealing.
as a limited liability partnership in 2004 and                                                                     on whether there is a need for retail advisors
had three capital partners. Daniel Hassell                                                                         to hold a Statement of Professional Standing
was not a capital partner but exercised a                FSA holds its annual public meeting                       confirming that the individuals are qualified to
significant influence over Vantage. The majority         FSA/PN/105/2010                         24 June 2010      give advice, have kept their knowledge up-to-
of brokerage business was previously owned                                                                         date and subscribe to a code of ethics. These
                                                         The FSA held its annual meeting at the Queen
by Mr Hassell and generated around half                                                                            increased standards will be supervised and
                                                         Elizabeth II Conference Centre, to discuss
of Vantage’s revenues. Mr Hassell received                                                                         enforced by the FSA.
                                                         the FSA’s Annual Report. Hector Sants also
approximately one third of the firm’s profits
                                                         discussed the proposed regulatory changes
and was on occasion presented as an owner in
                                                         announced by the Chancellor of the Exchequer
correspondence.
                                                         on 16 June 2010.                                          FSA and FRC to enhance auditors’
Vantage had applied for approval for Mr Hassell
                                                                                                                   contribution to prudential regulation
to perform a controlled function, when the
firm was formed; however, later withdraw this                                                                      FSA/PN/108/2010                   29 June 2010
application following an FSA investigation into                                                                    The FSA has released a discussion paper
Mr Hassell and the FSA informing Vantage of              FSA demands tough standards from                          which considers ways of enhancing auditors’
its concerns.                                            firms dealing with arrears and sale and                   contribution to regulation. The FSA sees this
In February 2007, the FSA told Mr Hassell that           rent back customers                                       as critical in enhancing market confidence,
he was no longer being investigated and again                                                                      financial stability and consumer protection.
                                                         FSA/PN/106/2010                         25 June 2010
Vantage applied for approval for Mr Hassell                                                                        The role of the discussion paper is to stimulate
                                                         The FSA has established new rules for                     debate over the role of auditors following the
to perform controlled functions. Vantage later
                                                         protecting vulnerable consumers in arrears                financial crisis. The discussion paper:
withdrew the application following the FSA
                                                         with their mortgages or entering sale and rent
indicating that it would not approve Mr Hassell                                                                    ■ questions aspects of the quality of audit
                                                         back agreements. Customers in arrears must
due to issues arising from its investigation.                                                                        work relevant to prudential regulation;
                                                         be treated fairly by firms and the following key
Despite the FSA informing Vantage of its                 areas have been identified:                               ■ outlines the FSA’s concerns about auditors’
concerns, Vantage continued to allow Mr                                                                              work on client assets and how they fulfil
                                                         ■ firms must not apply a monthly arrears
Hassell to hold a significant influence role until                                                                   their reporting obligations;
                                                           charge where an agreement is already in
2009, when the FSA conducted a Supervisory                                                                         ■ explores possible changes to the way in
                                                           place to repay the arrears;
visit. The FSA considered the breaches to be                                                                         which auditors undertake their work; and
particularly serious as Vantage was aware that           ■ payments of customers in financial
                                                           difficulties must first be allocated to                 ■ how auditors can contribute to prudential
Mr Hassell was not an authorised person and
                                                           clearing the missed monthly payments,                     supervision.
it knew the FSA did not consider Mr Hassell to
be a suitable person to hold his role at the firm.         rather than to arrears charges which can
As such, the FSA imposed a financial penalty of            be repaid later; and
£700,000.                                                ■ firms must consider all options for                     FSA fines and bans oil futures broker for
                                                           borrowers. Repossessions should always                  market abuse
                                                           be a last resort.
Ex-hedge fund trader sentenced for                                                                                 FSA/PN/109/2010                   29 June 2010
insider dealing                                          In addition, a new rule has been introduced
                                                                                                                   The FSA has fined Steven Noel Perkins £72,000
                                                         requiring firms to record all arrears handling
FSA/PN/104/2010                  22 June 2010                                                                      and banned him from working in the financial
                                                         telephone calls and keep the records for three
Anjam Saeed Ahmad was sentenced to 10                                                                              services industry, for engaging in market abuse.
                                                         years.
months imprisonment, suspended for two years,                                                                      Mr Perkins was an oil futures broker trading on
                                                         In relation to sale and rent back customers, the          behalf of clients, in an execution only capacity,
300 hours of unpaid work in the community
                                                         FSA has introduced the following measures:                in Brent Crude Futures contracts (Brent).
and fined £50,000 for insider dealing. Between
15 May 2009 and 22 August 2009, Mr Ahmad                 ■ banning of exploitative advertising and high-           During the early hours of 30 June 2009, Mr
conspired with another individual to deal in at            pressure sales techniques and prohibiting               Perkins traded high volumes on ICE Future
least 19 different types of securities, based on           the use of emotive terms like ‘fast sale’,              Europe exchange (ICE) without any client
inside information he had obtained through his             ‘mortgage rescue’ and ‘cash quickly’ in                 authorisation. As a direct result of his trading,
position as a trader at AKO Capital LLP.                   promotional literature;                                 the price of Brent increased significantly,
                                                         ■ a 14-day cooling-off period to give                     creating a false and misleading impression of
Mr Ahmad agreed to a guilty plea after entering
                                                           consumers more time to make decisions                   the supply, demand and price of Brent.
into an agreement with the FSA under the
Attorney General’s Guidelines on Plea                      on sale and rent back;                                  In sanctioning Mr Perkins, the FSA took into
Discussions in Cases of Serious or Complex               ■ banning of cold calling and prohibiting firms           consideration the fact that he originally lied to
Fraud. He has also entered into an agreement               from dropping promotional leaflets through              his employer and the trading seems to have
with the FSA under Section 73 of the Serious               letter boxes;                                           been a result of Mr Perkins being intoxicated.
Organised Crime and Police Act 2005 (“SOCPA                                                                        The FSA therefore limited the ban to a
                                                         ■ security of tenure for customers for a
2005”) to assist the FSA with its investigation                                                                    minimum of 5 years and said that it would have
                                                           minimum of five years; and
into his co-conspirator. The FSA was granted                                                                       imposed a fine of £150,000, but due to financial
powers to enter into agreements under                    ■ measures to ensure all risks are clearly                hardship and Mr Perkins co-operation, it was
SOCPA 2005 on 6 April 2010 and this is the first           signposted to the customer, via FSA                     reduced to £72,000.
time that the FSA has used these powers.                   literature and during the sales process.

                                                                                                                                                                         4
 Kinetic Partners

REGULATORY                                           PASSION for our work
                                                     Core values lie at the heart of our people and our business


FSA publishes review of with-profits                     PS10/08 – Regulatory reporting for                        and was glad that Hector Sants had agreed
sector                                                   sale and rent back firms – feedback on                    to stay on as the Chief Executive of the FSA,
FSA/PN/110/2010                  29 June 2010            CP10/4 and final rules                                    leading the transition and creation of the
                                                         The Policy Statement outlines the FSA’s                   prudential authority.
The FSA conducted a review of 17 firms
between September 2009 and February 2010,                rules and guidance for regulatory reporting
representing 80% of assets in with-profits               (including timescales) for sale and rent back             FSA announces Jon            Pain    to   leave
funds. The FSA were specifically focusing on             firms. The sale and rent back regime switched             organisation in 2011
how the firms treated their policy holders and           from interim to full on 30 June 2010. Any firms
                                                                                                                   The FSA has announced that Jon Pain, Board
how senior management had implemented                    authorised under the interim regime must stop
                                                                                                                   Member and Managing Director of Supervision
the FSA’s rules. While some of the firms were            all sale and rent back activity unless the firm
                                                                                                                   at the FSA, has decided to leave. Mr Pain
performing satisfactory, the FSA found that a            has applied for and been authorised under the
                                                                                                                   decided that there would not be a suitable role
significant number were not and it identified            full regime. It also provides feedback on CP10/4.
                                                                                                                   for him in the new structure and therefore
two main areas of concern:                                                                                         decided to leave the FSA in January 2011.
■ ineffective governance of with-profit funds,           PS10/10: Delivering the retail distribution
  especially in how independent challenge                review: corporate pensions – feedback to
  is provided by firms’ with-profits                     CP09/31 and final rules
  committee, which means that policyholders’             The Policy Statement reports back on the
  interests may not be properly protected;               feedback received to CP09/31 and sets out final           Consultation papers
  and                                                    rules and guidance for implementing Advisor
■ significant weaknesses in the quality                  Charging to the market for group personal                 CP10/12: Competence and ethics
  of consumer literature – the FSA is not                pensions, group stakeholder pensions and
                                                                                                                   This Consultation Paper (CP) seeks views on
  satisfied that all firms are doing enough to           group self-invested personal pensions (GPP). In
                                                                                                                   proposals to strengthen the FSA’s competence
  ensure      that      policyholders   receive          the final rules the FSA will:
                                                                                                                   and ethics requirements. This will involve
  sufficiently comprehensive, timely and clear           ■ ban commission on all new GPP products                  changes to the Training and Competence (TC)
  information to help them understand their                and sales, whether sold with advice or                  requirements, modernising the qualifications
  policies.                                                otherwise;                                              framework, the Statements of Principle and
The FSA is addressing its concerns with the              ■ allow commission to continue on GPPs                    Code of Practice for Approved Persons (APER)
firms individually and will publish a consultation         established before the ban on commission                and the Senior Management Arrangements,
paper by the end of 2010 outlining proposed                is implemented;                                         Systems and Controls (SYSC). The FSA is also
changes to the rules concerning with-profit                                                                        clarifying the ethical behaviours it expects from
                                                         ■ extend the ban on commission so product
funds.                                                                                                             individuals operating as approved persons.
                                                           providers do not pay commission on
                                                           investment products linked to occupational              The proposals the FSA is making are as follows:
High Court orders Pruthi, Anderson and                     pension schemes that are sold as GPP                    ■ introduce a thirty month time limit, for
Peacock to pay £115m to the FSA                            alternatives;                                             individuals to pass all modules of a
FSA/PN/111/2010                  29 June 2010            ■ allow ‘consultancy charging’ from GPP                     qualification required by the FSA’s rules for
The High Court has ruled that John Anderson,               contributions and/or members’ accounts on                 the role they are conducting;
Kenneth Peacock and Kautilya Nandan Pruthi                 a £-for-£ basis;                                        ■ revoke the existing Transitional Provisions
must pay approximately £115 million to the               ■ ensure advisers disclose the full adviser                 for Designated Investment Business;
FSA, in relation to their activities of unlawfully         remuneration to their employer’s clients;               ■ review some of the activities in Appendix 1
accepting deposits without authorisation                   and                                                       of the TC sourcebook;
from the FSA. This ruling comes after the                ■ confirm that the ban on factoring for                   ■ publish a list of qualifications that meet the
High Court previously determined that the                  individual investments – including personal               regulatory requirements within the
three individuals, under their trading styles              pensions – extends to adviser remuneration                handbook;
of Business Consulting International, John                 under GPPs.
Anderson Consulting and Kenneth Peacock                                                                            ■ clarify the expectations about responsibility
Consulting, were in breach of section 19 of                                                                          for competence within APER; and
the Act and unlawfully accepted deposits from                                                                      ■ additional descriptions of behaviour which
investors.                                               Statements                                                  do not comply with APER and consult on
                                                                                                                     applying them across the approved persons
                                                                                                                     regime.
                                                         FSA announces Sally Dewar to leave
                                                         organisation in May 2011                                  For more details please see: http://www.fsa.gov.
Policy statements
                                                                                                                   uk/pubs/cp/cp10_12.pdf
                                                         The FSA has announced that Sally Dewar,
                                                         Board Member and Managing Director of Risk
PS10/9: Mortgage market review –
                                                         at the FSA, has decided to leave. Ms Dewar
arrears and approved persons – including
                                                         commented that after deciding not to stand for            CP10/13: Tracing        employers’      liability
feedback to CP10/2
                                                         the Chief Executive role at the FSA, it was time          insurers
The Policy Statement outlines the FSA’s final            for her to step down from the FSA Board and
rules, guidance and transitional provisions                                                                        This Consultation Paper (CP) follows
                                                         pursue new opportunities.
regarding the changes to the Mortgages                                                                             a consultation paper published by the
                                                         FSA Chairman welcomes Chancellor’s                        Department for Work and Pensions, proposing
and Home Finance: Conduct of Business
                                                         plans for regulatory reform                               to create an Employers’ Liability Tracing Office,
sourcebook (MCOB) and its proposals to
extend the approved persons regime so it will            Lord Turner, the Chairman of the FSA, has                 and the Ministry of Justice announcing a range
apply to those individuals advising on, arranging        stated that he welcomes the changes to                    of measures to help support people who have
or entering home finance business. It also               financial regulation, outlined by the Chancellor          been exposed to asbestos. This CP seeks views
provides feedback on CP10/2.                             of the Exchequer in his Mansion House speech              on proposals to:

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REGULATORY                                           PASSION for our work
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■ require all general insurers to notify the             ■ the scope of restructuring transactions                      Speeches
  FSA whether they carry out UK commercial                 covered by the FSA’s general Special Project
  lines employers liability insurance contracts;           Fee (SPF) was extended to enable the FSA
                                                                                                                        Securities and Exchange Commission
  and                                                      to recover exceptional costs incurred
                                                                                                                        (SEC) regulation outside the US
■ require all insurers carrying out UK                     when firms are placed in administration or
                                                                                                                        conference
  commercial lines employers liability                     liquidation (FSA 2010/20);
                                                                                                                        Dan Waters                                    10 June 2010
  insurance to make certain policy and other             ■ introduction of ‘consultancy charging’ in
  information they generally have available for            the group pensions market (FSA 2010/21);                     In this speech, Mr Waters spoke of the
  tracing purposes in a specified easily                                                                                regulatory changes which are taking place in
                                                         ■ clarifying existing requirements for arrears
  available form.                                                                                                       the US and Europe. This included:
                                                           management and introduce a new
For more details please see: http://www.fsa.gov.           requirement for firms to record telephone                    ■ the establishment of three new European
uk/pubs/cp/cp10_13.pdf                                     calls of their arrears handling dealings with                  Supervisory Authorities, to replace the
                                                           customers (FSA 2010/22);                                       existing committees responsible for
                                                                                                                          banking, insurance and securities regulation;
CP10/14:      Delivering      the     RDR:               ■ introducing an electronic reporting
                                                           requirement for sale and rent back firms                     ■ the creation of the European Systemic Risk
professionalism, including its applicability
                                                           (FSA 2010/23); and                                             Board;
to pure protection advice, with feedback
to CP09/18 and CP09/31                                   ■ amending the existing process for reporting                  ■ the problems associated with Alternative
                                                           certain    regulatory    transactions    by                    Investment Fund Managers Directive and
This Consultation Paper (CP) brings together
                                                           introducing a requirement of mandatory                         the tabled proposals for marketing; and
all the work to date on professional standards
under the Retail Distribution Review (RDR) –               electronic submissions (FSA 2010/24).                        ■ the aspects the FSA fully supports, which
on ethical behaviour, continuing professional            No changes were made outside the Handbook.                       relates to gathering information relevant
development (CPD) and qualifications. It                                                                                  to systemic risk from alternative investment
                                                         For more details please see:
discusses the FSA’s final policy proposals for the                                                                        managers.
                                                         http://www.fsa.gov.uk/pubs/handbook/hb_
supervision and enforcement of professional                                                                             For more details and the full speech please see:
                                                         notice101.pdf
standards and for Statements of Professional                                                                            h t t p : / / w w w. f s a . g o v. u k / p a g e s / L i b r a r y /
Standing. It also provides a list of appropriate                                                                        C o m mu n i c a t i o n / S p e e c h e s / 2 0 1 0 / 0 5 2 2 _
examinations which a retail investment advisor           Handbook Development Newsletter 124                            dw.shtml
will need to pass prior to 1 January 2013 and            There have been no Handbook-related or
a summary of the feedback received from                  other developments in June. The following
CP09/31 and CP09/18.                                                                                                    Regulatory reform
                                                         publications have been issued since the last
For more details please see: http://www.fsa.gov.         edition of the newsletter:                                     Richard Sutcliffe                             10 June 2010
uk/pubs/cp/cp10_14.pdf                                   1. CP10/13         Tracing       employers’        liability   In this speech Mr Sutcliffe, the Head of
                                                            insurers;                                                   Prudential Banking and Investment Business
                                                                                                                        Policy at the FSA., discusses the FSA’s position
                                                         2. CP10/12 Competence and ethics; and
                                                                                                                        within the international policy-making context
Discussion paper                                         3. PS10/7 Consolidated Policy Statement on                     and how it aims to achieve regulatory reform,
                                                            our fee-raising arrangements and regulatory                 with the main focus on capital, liquidity and
                                                            fees and levies 2010/11 – including feedback                client money and assets, including:
DP10/3:    Enhancing     the    auditor’s
                                                            on CP10/5 and ‘made rules’.
contribution to prudential regulation                                                                                   ■ the Basel II changes;
                                                         For further information on the publication and
This discussion paper is designed to stimulate                                                                          ■ amendments to the Capital Requirements
                                                         for “consultation ends” and “comments by”
debate on how the FSA can best use audits and                                                                             Directive;
                                                         dates, please see:
auditors to meet its statutory objectives and                                                                           ■ implementing Solvency II; and
how the FSA, the Financial Reporting Council             http://www.fsa.gov.uk/pubs/handbook/hb124.
                                                         pdf                                                            ■ the creation of a new ‘Client Assets Sector’
(FRC) and auditors can best work together
                                                                                                                          within the FSA.
to enhance prudential regulation. It is a joint
publication between the FSA and the FRC.                                                                                For more details and the full speech please see:
The paper highlights the need for auditors to                                                                           h t t p : / / w w w. f s a . g o v. u k / p a g e s / L i b r a r y /
exercise professional scepticism to their work,                                                                         Communication/Speeches/2010/0610_rs.shtml
rather than imply gathering and accepting
evidence to support firms’ assertions.                   Newsletter
                                                                                                                        Do regulators have a role to play in
For more details please see: http://www.fsa.gov.                                                                        judging culture and ethics?
uk/pubs/discussion/dp10_03.pdf                           Smaller Wholesale Insurance Intermediaries:                    Hector Sants                                  17 June 2010
                                                         Issue 2                                     June 2010          In this speech, Mr Sants discusses that it is for
                                                         This newsletter contains an overview of                        society as a whole to determine an ethical
                                                         the anti-bribery and corruption report and                     framework, not an unelected regulator. It is
Handbook publications                                    the small firms financial crime review. It also                however, its responsibility to ensure firms
                                                         comments on how firms should be handling                       have the right people in influential positions,
                                                         complaints and the new e-mail arrangements                     ensure they have the right governance and
Handbook Notice 101                                      the FSA has in place. Tony Brooke-Taylor, Head                 behaviour frameworks and that firms should be
The FSA made the following changes to                    of the Wholesale Insurance Department at the                   assessing their actions against society’s wider
the Handbook:                                            FSA, also announced that he will be leaving the                expectations, not just shareholder value.
■ minor administrative amendments to the                 FSA in June 2010.                                              For more details and the full speech please see:
  Handbook, none of which represents any                 For more details please see: http://www.fsa.gov.               h t t p : / / w w w. f s a . g o v. u k / p a g e s / L i b r a r y /
  change to Handbook policy (FSA 2010/19);               uk/pubs/newsletters/gi_jul10.pdf                               Communication/Speeches/2010/0617_hs.shtml

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 REGULATORY                                                             PASSION for our work
                                                                        Core values lie at the heart of our people and our business


FSA outlines plans for mortgage market                                      ■ the highlights of the enforcement action                              Miscellaneous
Lesley Titcomb                                22 June 2010                    taken over the last year;
In this speech, Ms Titcomb discusses the FSA’s                              ■ reforming the FSA’s consumer protection                               Insurance:  Conduct    of   Business
Mortgage Market Review, to improve the                                        approach;                                                             Sourcebook       (ICOBS)       post-
outcomes for consumers and to help provide                                  ■ changes to the regulatory structure going                             implementation review: statement of
the solid foundations for rebuilding our                                      forward; and                                                          findings
mortgage market, to enhance sustainability and                              ■ the challenges that lay ahead.                                        The FSA has published a statement of findings
ensure it works better for consumers.                                                                                                               following a review of ICOBS to:
                                                                            For more details and the full speech please see:
Ms Titcomb states that the FSA will take a more                                                                                                     ■ Aassess the effects of taking a more
                                                                            h t t p : / / w w w. f s a . g o v. u k / p a g e s / L i b r a r y /
intensive approach, proactively intervening and                                                                                                       principle-based approach on general
                                                                            Communication/Speeches/2010/0624_hs.shtml
scrutinising business models and strategies,                                                                                                          insurance markets;
analysing risks at an individual firm level and
                                                                                                                                                        -   the FSA found that a more principles-
making its own judgements about the risks to                                Annual          public        meeting:           Chairman’s
                                                                                                                                                            based approach did not negatively affect
the market and to customers from particular                                 speech
                                                                                                                                                            consumer outcomes, but it would
products or strategies.                                                     Adair Turner                                  24 June 2010                      continue to monitor this going forward.
The FSA will publish three consultation papers                              In this speech Mr Turner discusses the                                  ■ determine whether new rules for
on its Mortgage Market Review, the first was                                problems associated with assessing the FSA’s                              protection products are being implemented
published in January 2010, on arrears and                                   performance over a year, the mistakes made                                as intended and assess the impact of more
approved persons and it will soon publish                                   in previous years and the changes the FSA                                 detailed oral disclosure requirements on
a policy statement in connection with this,                                 has under gone since 2007. In particular                                  consumer outcomes; and
outlining rule changes. The second paper will                               enforcement, prudential supervision, banking
be on responsible lending and will be published                                                                                                         -   the FSA found that firms were not
                                                                            regulation and retail conduct of business
in July, and the third paper on distribution and                                                                                                            meeting the standards expected by the
                                                                            regulation and supervision.
advice will be published towards the end of the                                                                                                             FSA and it will consider further whether
                                                                            For more details and the full speech please see:                                it is necessary to change the
year.
                                                                            h t t p : / / w w w. f s a . g o v. u k / p a g e s / L i b r a r y /           requirements on firms in light of this.
Ms Titcomb ends by discussing the reactions
                                                                            Communication/Speeches/2010/0624_at.shtml                               ■ examine consumer outcomes in the Private
the FSA has received to some of its other
proposals on:                                                                                                                                         Medical Insurance (PMI) market.
■ prudential reform and non-banks;                                          FSA’s approach to consumer protection                                       -   the FSA concluded that removing the
                                                                            Sheila Nicoll                                 24 June 2010                      detailed rules had not increased the
■ conduct of Business;
                                                                                                                                                            risk of consumer detriment to the
■ interest only mortgages and income                                        In this speech Ms Nicoll began by explaining
                                                                                                                                                            PMI market or that there are risks that
  verification and affordability; and                                       that despite the change in regulatory structure,
                                                                                                                                                            can be addressed by changing its
                                                                            the FSA will continue to deliver the programme
■ extending the FSA’s scope.                                                                                                                                regulatory approach.
                                                                            outlined in its Business Plan in February.As such,
For more details and the full speech please see:                            it will continue to expect firms to interact with
h t t p : / / w w w. f s a . g o v. u k / p a g e s / L i b r a r y /       it as usual. Ms Nicoll then addresses consumer
Communication/Speeches/2010/0617_lt.shtml                                   protection and the new strategy the FSA                                 Final notices
                                                                            intends to take to better protect consumers,
                                                                            this includes:
Introduction to the FSA Enforcement                                                                                                                 Paul David Abel trading as Abel Home
conference                                                                  ■ earlier identification of risks;
                                                                                                                                                    Loans
Margaret Cole                                 22 June 2010                  ■ sector-wide interventions;
                                                                                                                                                    The FSA has given Paul David Abel trading as
A speech was given by Margaret Cole, the                                    ■ more intensive supervision of firms;                                  Abel Home Loans, a Final Notice to cancel
Director Enforcement and Financial Crime at                                 ■ greater scrutiny of products and their                                the permission granted to carry out regulated
the FSA. In this speech, Ms Cole discusses the                                governance;                                                           activities. This is due to a failure to pay fees
various achievements over the last two years                                ■ a more aggressive approach to enforcement;                            and levies of £1,373.15 owed to the FSA and
and the future for enforcement going forward.                                                                                                       a failure to satisfy the threshold conditions set
                                                                            ■ effective framework for redress; and
For more details and the full speech please see:                                                                                                    out in Schedule 6 of the Act.
                                                                            ■ early and effective intervention in Europe
h t t p : / / w w w. f s a . g o v. u k / p a g e s / L i b r a r y /         and in other international fora.
C o m mu n i c a t i o n / S p e e c h e s / 2 0 1 0 / 0 6 2 2 _                                                                                    Nigel Alexander McClements trading as
                                                                            For more details and the full speech please see:
mc.shtml                                                                                                                                            Northumbria Mortgages
                                                                            h t t p : / / w w w. f s a . g o v. u k / p a g e s / L i b r a r y /
                                                                                                                                                    The FSA has given Nigel Alexander McClements
                                                                            Communication/Speeches/2010/0624_sn.shtml
2010 CEO Annual Public Meeting speech                                                                                                               trading as Northumbria Mortgages, a Final
                                                                                                                                                    Notice to cancel the permission granted to
Hector Sants                                  24 June 2010
                                                                                                                                                    carry out regulated activities. This is due to a
A speech was given by Hector Sants, the                                                                                                             failure to pay fees and levies of £817.94 owed
Chief Executive of the FSA. In this speech                                                                                                          to the FSA and a failure to satisfy the threshold
Mr Sants discusses how the FSA has tackled                                                                                                          conditions set out in Schedule 6 of the Act.
its regulatory obligations, whilst delivering a
substantial programme of institutional reform
against of backdrop of economic uncertainty                                                                                                         Hasmukh Patel trading as Safeguard
and fragile market conditions.The main features                                                                                                     Financial Services
of the speech included:                                                                                                                             The FSA has given Hasmukh Patel trading as
■ how the FSA                     achieved         its    reform                                                                                    Safeguard Financial Services, a Final Notice to
  programme;                                                                                                                                        cancel the permission granted to carry out

                                                                                                                                                                                                        7
 Kinetic Partners

REGULATORY                                           PASSION for our work
                                                     Core values lie at the heart of our people and our business


regulated activities. This is due to a failure           agreed to settle at an early stage and therefore          2010. Close Investments agreed to settle at an
to pay fees and levies of £1,592.09 owed to              qualified for a 30% discount.                             early stage and qualified for a 30% discount.
the FSA and a failure to satisfy the threshold
conditions set out in Schedule 6 of the Act.
                                                         Motorloanshop.com Limited                                 Rowan Dartington & Co Limited
                                                         The FSA has given Motorloanshop.com                       The FSA has given Rowan Dartington & Co
Khalid Khan trading as K K Associates                    Limited (MLS.com), a Final Notice to cancel               Limited, a Final Notice which notified it that
The FSA has given Khalid Khan trading as K               the permission granted to carry out regulated             the FSA had decided to impose a financial
K Associates, a Final Notice to cancel the               activities. This is due to MLS.com failing to             penalty of £511,000 in respect of breaches
permission granted to carry out regulated                satisfy the Threshold Conditions set out in               of Principles 10 (Client Assets) and 2 (Skill,
activities. This is due to a failure to pay fees         Schedule 6 to the Act, in that its resources              care and diligence) of the FSA’s Principles for
and levies of £1,093.95 owed to the FSA and              were not adequate in relation to the regulated            Businesses and related Rules in the Client
a failure to satisfy the threshold conditions set        activities it had permission to carry on.                 Assets Handbook between 13 May 2007 and
out in Schedule 6 of the Act.                                                                                      16 September 2009. Rowan Dartington & Co
                                                                                                                   Limited agreed to settle at an early stage and
                                                         Joseph Anthony Masi
                                                                                                                   qualified for a 30% discount.
Parkers                                                  The FSA has given Joseph Anthony Masi, a Final
The FSA has given Parkers, a Final Notice to             Notice which notified him that it had decided
cancel the permission granted to carry out               to impose a prohibition order, pursuant to                Stephen Straw
regulated activities. This is due to a failure           section 56 of the Act, to prevent Mr Masi from            The FSA has given Stephen Straw, a Final
to pay fees and levies of £2,289.78 owed to              performing any function in relation to any                Notice which notified him that it had decided
the FSA and a failure to satisfy the threshold           regulated activities, on the basis that he is not a       to impose a prohibition order, pursuant to
conditions set out in Schedule 6 of the Act.             fit and proper person.                                    section 56 of the Act, to prevent Mr Strawi
                                                                                                                   from performing any function in relation to
                                                                                                                   any regulated activities, on the basis that he is
Richard Granville Greenland                              Joseph Anthony Masi trading as Select
                                                                                                                   not a fit and proper person. Specifically, on 27
The FSA has given Richard Granville Greenland,           Mortgage Services
                                                                                                                   January 2009, Mr Straw was convicted of 19
a Final Notice which notified him that it                The FSA has given Joseph Anthony Masi trading             counts of financial crime offences, for which
had decided to imposed a financial penalty,              as Select Mortgage Services, a Final Notice to            he was sentenced to 48 months imprisonment,
pursuant to section 66 of the Act, of £100,000           cancel the permission granted to carry out                suspended for 24 months on a condition of 250
for knowing involvement in mortgage fraud                regulated activities. This is due to a failure to         hours of unpaid work.
and £20,000 for his failure as a holder of a             conduct its business with integrity and failing to
significant influence function, to ensure the            satisfy the Threshold Conditions set out in Part
business he was responsible for, complied with           1 of Schedule 6 to the Act.                               Delwyn Arthur Way
the standards of the regulatory system. The                                                                        The FSA has given Delwyn Arthur Way, a
FSA also decided to impose a prohibition order,                                                                    Director of Shield Insurance Consultancy
                                                         Roger Edward Chapman trading as
pursuant to section 56 of the Act, to prevent                                                                      Limited, a Final Notice which notified him that
                                                         Chapman Webster & Company
Mr Greenland from performing any function in                                                                       it had decided to impose a financial penalty of
relation to any regulated activities.                    The FSA has given Roger Edward Chapman                    £77,957 for a failure to comply with Statements
                                                         trading as Chapman Webster & Company, a                   of Principle 1 and 4 of the FSA’s Statements of
                                                         Final Notice to cancel the permission granted             Principle for Approved Persons and Code of
Andrew Charles Kerr                                      to carry out regulated activities. This is due            Practice for Approved Persons (APER).
The FSA has given Andrew Charles Kerr, a                 to Chapman Webster & Company failing to
                                                                                                                   The financial penalty covers the estimated
Final Notice which notified him that the FSA             comply with an award made by the Financial
                                                                                                                   amount of client money MrWay misappropriated
had decided to impose a financial penalty of             Ombudsman Service (FOS) despite numerous
                                                                                                                   from Shield’s client account.The FSA has stated
£100,000 for engaging in market abuse. The               requests by the FOS and FSA to do so.The FSA
                                                                                                                   that were it not for verifiable evidence of
FSA has also made a prohibition order against            therefore concluded that Chapman Webster
                                                                                                                   financial hardship, it would also have imposed a
Mr Kerr, pursuant to section 56 of the Act,              & Company did not pay due regard to the
                                                                                                                   punitive penalty of £50,000.
prohibiting him from performing any function in          interests of its customer or treat her fairly, a
relation to a regulated activity, on the grounds         breach of Principle 6 of the FSA’s Principles for         In addition, the FSA also decided to impose a
that he is not a fit and proper person.                  Business. The FSA also found that Mr Chapman              prohibition order, pursuant to section 56 of the
                                                         was not conducting his business soundly and               Act, to prevent Mr Way from performing any
                                                         prudently and in compliance with proper                   function in relation to any regulated activities.
Blue System Trading Limited
                                                         standards and therefore had failed to comply
The FSA has given Blue System Trading Limited,           with Threshold Condition 5 (Suitability).                 Griffiths McAlister Insurance Brokers
a Final Notice to cancel the permission granted
                                                                                                                   Limited
to carry out regulated activities.This is due to a
failure to pay fees and levies of £2,768.45 owed         Close Investments                                         The FSA has given Griffiths McAlister Insurance
to the FSA and a failure to satisfy the threshold        The FSA has given Close Investments, a Final              Brokers Limited, a Final Notice which notified
conditions set out in Schedule 6 of the Act.             Notice which notified it that the FSA had                 it that pursuant to section 45 of the Act, it had
                                                         decided to impose a financial penalty of £98,000          decided to cancel the permission granted to it
                                                         in respect of breaches of Principles 10 (Client           under Part IV of the Act.
J.P.Morgan Securities Ltd
                                                         Assets) and 3 (Management and Control) of the
The FSA has given J.P.Morgan Securities Ltd, a           FSA’s Principles for Businesses and breaches              Adrian Shillaker
Final Notice which notified it that the FSA had          of Rules 7.3.2R (Organisational requirements:
decided to impose a financial penalty of £33.32                                                                    The FSA has given Adrian Shillaker, a Director
                                                         client money) and 7.8.1R (Notification and
million in respect of a breach of Principle 10                                                                     of Griffiths McAlister Insurance Brokers
                                                         acknowledgement of trust) in the Client Assets
of the FSA’s Principles for Businesses and                                                                         Limited, a Final Notice which notified him
                                                         Handbook between January 2008 and January
breaches of the client money rules. J.P.Morgan                                                                     that pursuant to section 63 of the Act, it had

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 Kinetic Partners

REGULATORY                                            PASSION for our work
                                                      Core values lie at the heart of our people and our business


decided to remove his permission to perform               -Yewande Epega trading as EMortgages@                     Lavell & Co Limited
Controlled Functions in relation to Griffiths             Landmark                                                  The FSA has given Lavell & Co Limited, a Final
McAlister Insurance Brokers Limited. The FSA              The FSA has given Yewande Epega trading as                Notice to cancel the permission granted to
also decided to impose a prohibition order,               EMortgages@Landmark, a Final Notice to                    carry out regulated activities, pursuant to
pursuant to section 56 of the Act, to prevent             cancel the permission granted to carry out                section 45 of the Act.This is due to Lavell & Co
Mr Shillaker from performing any function in              regulated activities, pursuant to section 45 of           Limited failing to submit its Retail Mediation
relation to any regulated activities.                     the Act. This is due to EMortgages@Landmark               Activities Return (RMAR) for the period ending
                                                          failing to submit its Retail Mediation Activities         30 September 2009.This is a failure of Principle
Michael Adam Goldman formerly trading                     Return (RMAR) for the period ending 30                    11 of the FSA’s Principles for Businesses and
as Goldman Group                                          September 2009. This is a failure of Principle            the threshold conditions set out in Schedule
                                                          11 of the FSA’s Principles for Businesses and             6 of the Act.
The FSA has given Michael Adam Goldman
                                                          the threshold conditions set out in Schedule
formerly trading as Goldman Group, a Final
                                                          6 of the Act.
Notice which notified him that it had decided                                                                       Vantage Capital Markets LLP
to impose a prohibition order, pursuant to                                                                          The FSA has given Vantage Capital Markets
section 56 of the Act, to prevent Mr Goldman              John R May                                                LLP, a Final Notice which notified it that the
from performing any function in relation to any           The FSA has given John R May, a Final Notice              FSA had decided to impose a financial penalty
regulated activities, on the basis that he is not a       to cancel the permission granted to carry out             of £700,000 for a contravening section 59 of
fit and proper person.                                    regulated activities, pursuant to section 45 of           the Act and breaching Principle 3 of the FSA’s
Specifically, the FSA concluded that Mr                   the Act. This is due to John R May failing to             Principles for Business. Specifically, Vantage
Goldman was involved in submitting mortgage               submit its Retail Mediation Activities Return             Capital Markets LLP allowed Mr Daniel William
application based on false and misleading                 (RMAR) for the period ending 30 September                 Hassell to perform a Controlled Function
information. The FSA also confirmed that it               2009.This is a failure of Principle 11 of the FSA’s       4 (Partner) and have a significant influence
would have imposed a financial penalty of                 Principles for Businesses and the threshold               over Vantage Capital Markets LLP, despite Mr
£102,158, had Mr Goldman not been made                    conditions set out in Schedule 6 of the Act.              Hassell not being authorised to do so and the
bankrupt on 2 November 2009.                                                                                        FSA not being satisfied that he was a fit and
                                                                                                                    proper person.
                                                          Wood and Craven Limited
                                                          The FSA has given Wood and Craven Limited, a
David Neil Dodds trading as DND                           Final Notice to cancel the permission granted             Carmen Murphy trading as                   CMP
Mortgages                                                 to carry out regulated activities, pursuant to            Independent Mortgage Advisers
The FSA has given David Neil Dodds trading                section 45 of the Act. This is due to Wood                The FSA has given Carmen Murphy trading as
as DND Mortgages, a Final Notice to cancel                and Craven Limited failing to submit its Retail           CMP Independent Mortgage Advisers, a Final
the permission granted to carry out regulated             Mediation Activities Return (RMAR) for the                Notice to cancel the permission granted to
activities. This is due to a failure to pay fees          period ending 30 September 2009. This is a                carry out regulated activities. This is due to a
and levies of £1,682.52 owed to the FSA, and              failure of Principle 11 of the FSA’s Principles           failure to pay fees and levies of £1,351.91owed
a failure to satisfy the threshold conditions set         for Businesses and the threshold conditions set           to the FSA and a failure to satisfy the threshold
out in Schedule 6 of the Act.                             out in Schedule 6 of the Act.                             conditions set out in Schedule 6 of the Act.


Patrick James O’Hagan trading as Apl                      Your House of Finance UK Limited
Protection                                                The FSA has given Your House of Finance UK                Anjam Saeed Ahmad
The FSA has given Patrick James O’Hagan                   Limited, a Final Notice to cancel the permission          The FSA has given Anjam Saeed Ahmad a Final
trading as Apl Protection, a Final Notice to              granted to carry out regulated activities,                Notice, informing him that the FSA has decided
cancel the permission granted to carry out                pursuant to section 45 of the Act. This is due            to impose a financial penalty on Mr Ahmad of
regulated activities, pursuant to section 45 of           to Your House of Finance UK Limited failing to            £131,000, pursuant to section 66 of the Act.
the Act. This is due to Apl Protection failing to         submit its Retail Mediation Activities Return             The reason for the action by the FSA, was due
submit its Retail Mediation Activities Return             (RMAR) for the period ending 30 September                 to Mr Ahmad directing preferential trades and
(RMAR) for the period ending 30 September                 2009.This is a failure of Principle 11 of the FSA’s       arranging higher commission rates (between
2009.This is a failure of Principle 11 of the FSA’s       Principles for Businesses and the threshold               35% – 50%) with an associated broker of
Principles for Businesses and the threshold               conditions set out in Schedule 6 of the Act.              his, without informing AKO Capital LLP (his
conditions set out in Schedule 6 of the Act.                                                                        employer).
                                                          London Provident Limited
                                                          The FSA has given London Provident Limited, a
Paul Kenneth Nolan trading as Venture                     Final Notice to cancel the permission granted             Steven Noel Perkins
Financial Services                                        to carry out regulated activities, pursuant to
                                                                                                                    The FSA has given Steven Noel Perkins a Final
                                                          section 45 of the Act. This is due to London
The FSA has given Paul Kenneth Nolan trading                                                                        Notice, informing him that the FSA has decided
                                                          Provident Limited failing to submit its Retail
as Venture Financial Services, a Final Notice to                                                                    to impose a financial penalty on Mr Perkins of
                                                          Mediation Activities Return (RMAR) for the
cancel the permission granted to carry out                                                                          £72,000, pursuant to section 123(1) of the Act.
                                                          period ending 30 September 2009. This is a
regulated activities, pursuant to section 45 of                                                                     The FSA also imposed a prohibition, pursuant
                                                          failure of Principle 11 of the FSA’s Principles
the Act.This is due to Venture Financial Services                                                                   to section 56 of the Act, to prevent Mr Perkins
                                                          for Businesses and the threshold conditions set
failing to submit its Retail Mediation Activities                                                                   from performing any function in relation to
                                                          out in Schedule 6 of the Act.
Return (RMAR) for the period ending 30                                                                              any regulated activities, on the basis that he
September 2009. This is a failure of Principle                                                                      is not a fit and proper person. The reason for
11 of the FSA’s Principles for Businesses and                                                                       the action by the FSA, was due to Mr Perkins
the threshold conditions set out in Schedule                                                                        engaging in market abuse whilst drunk.
6 of the Act.
                                                                                                                                                                        9
 Kinetic Partners

REGULATORY                                              PASSION for our work
                                                        Core values lie at the heart of our people and our business


Neale Andrew Morton                                         Complaint against the FSA                                 In light of the actions which the complainant
The FSA has given Neale Andrew Morton a                                                                               took, the Complaints Commissioner found in
Final Notice, informing him that the FSA has                                                                          favour of the complainant.
                                                            Reference Number: GE-L01111 11 May
decided to impose a financial penalty on Mr                 2010                                                      In reaching his decision, the Complaints
Morton of £130,192, pursuant to section 66                                                                            Commissioner considered the fact that the
                                                            A complaint was brought against the FSA in
of the Act. The FSA also imposed a prohibition                                                                        complainant had clicked the ‘Submit all’ button
                                                            respect of a £250 administration fee incurred
order, pursuant to section 56 of the Act, to                                                                          when submitting the Gabriel return, but for
                                                            for the late submission of the complainant’s
prevent Mr Morton from performing any                                                                                 some reason this did not submit Part-J, a known
                                                            quarterly Gabriel return. The return was due
function in relation to any regulated activities,                                                                     problem to the FSA. While the FSA states that
                                                            to be submitted on 22 December 2008, but
on the basis that he is not a fit and proper                                                                          two e-mails were sent to the complainant, the
                                                            was not actually submitted until 4 June 2009.
person. The reason for the action by the FSA,                                                                         Complaints Commissioner felt on balance,
                                                            Despite arguments that the complainant
was due to Mr Morton obtaining a mortgage                                                                             that these were not received. He reached this
                                                            experienced difficulties on a number of
based on false and misleading information,                                                                            conclusion based on the fact that as soon as
                                                            occasions with the Gabriel reporting system,
failing to take reasonable steps to prevent                                                                           the complainant received a written notice, it
                                                            the Complaints Commissioner found in favour
Neale Morton IMS Limited from being used as                                                                           immediately acted to resolve the situation.
                                                            of the FSA.
a vehicle for financial crime and not disclosing
matters of material significance to the FSA.                In reaching this decision, the Complaints
                                                            Commissioner considered the fact that the                 Reference Number: GE-L01098            1 June
                                                            complainant’s return was due on 22 December               2010
                                                            2008; however, the complainant did not inform             A complaint was brought against the FSA in
                                                            the FSA that it was experiencing difficulties             respect of a £250 administration fee incurred
                                                            until 28 January 2009. Between 13 March 2009              for the late submission of the complainant’s
                                                            and 14 August 2009, there is no record of any             quarterly Gabriel return. The return was due
                                                            contact with the FSA relating to problems with            to be submitted on 28 July 2009, but was not
Supervisory notices                                         the Gabriel reporting system, despite an e-mail           actually submitted until 29 September 2009.
                                                            from the FSA informing the complainant that               Despite arguments that the complainant
Splotlands Credit Union Limited                             the return was outstanding and if it was not              experienced difficulties registering a Principal
                                                            submitted within the next 10 days a late return           User for the firm and contacted the Firm’s
The FSA has given Splotlands Credit Union
                                                            administration fee would be incurred.                     Contact Centre for assistance, the Complaints
Limited, a Supervisory Notice to vary its
                                                                                                                      Commissioner found in favour of the FSA.
permissions by removing its regulatory activity
with immediate effect. The FSA has also placed              Reference Number: GE-L01092 12 May                        In reaching this decision, the Complaints
a number of restrictions on Splotlands Credit               2010                                                      Commissioner considered the fact that the
Union Limited.The reason for this action is that                                                                      complainant’s return was due on 28 July 2009;
                                                            A complaint was brought against the FSA in
the FSA has concluded that Splotlands Credit                                                                          however, the complainant did not register a
                                                            respect of a £250 administration fee incurred for
Union Limited is failing and will continue to fail                                                                    Principal User until 27 August and did not
                                                            the late submission of the complainant’s RMA-J
to satisfy the threshold conditions in Part 1 of                                                                      submit the Gabriel return until 29 September
                                                            (Part-J) Gabriel return. The return was due to
Schedule 6 of the Act. Specifically, it has failed to                                                                 2009. This was despite an FSA reminder
                                                            be submitted on 14 September 2009, but was
maintain positive capital and therefore presents                                                                      extending the deadline until 28 August 2009.
                                                            not actually submitted until 6 November 2009.
a risk to consumers.




   Details of all FSA publications can be found at: http://www.fsa.gov.uk/Pages/Library/Publications_by_date/index.shtml


                                                                                                                                                                         10
 Kinetic Partners

REGULATORY                                             PASSION for our work
                                                       Core values lie at the heart of our people and our business




Contacts:
Audit and assurance                                        Regulatory consulting and compliance                       London
michelle.carroll@kinetic-partners.com                      peter.towler@kinetic-partners.com                          One London Wall, Floor 10
neil.griggs@kinetic-partners.com                           monique.melis@kinetic-partners.com                         London, EC2Y 5HB, United Kingdom
                                                           andrew.shrimpton@kinetic-partners.com                      t: +44 20 7862 0700
Corporate finance                                          chris.lombardy@kinetic-partners.com
killian.buckley@kinetic-partners.com                                                                                  Dublin
                                                           bryony.livingstone@kinetic-partners.com
john.hamrock@kinetic-partners.com                                                                                     Iveagh Court, Floor 5 Block D
                                                           john.hamrock@kinetic-partners.com
                                                                                                                      Harcourt Road, Dublin 2, Ireland
Corporate recovery and liquidation                         Tax advisory                                               t: +353 1 475 0520
geoff.varga@kinetic-partners.com                           david.butler@kinetic-partners.com
bill.cleghorn@kinetic-partners.com                                                                                    Grand Cayman
                                                           stephen.rabel@kinetic-partners.com
                                                                                                                      The Harbour Centre, Floor 1
Forensic and dispute resolution                            claire.mascarenhas@kinetic-partners.com
                                                                                                                      PO Box 10387, 42 North Church Street
julian.korek@kinetic-partners.com                          marie.barber@kinetic-partners.com
                                                                                                                      Grand Cayman, Cayman Islands, KY1-1004
nick.matthews@kinetic-partners.com                         Technology                                                 t: +1 345 623 9900
raymond.oneill@kinetic-partners.com                        philip.hall@kinetic-partners.com
neil.morris@kinetic-partners.com                                                                                      New York
                                                           glen.millar@kinetic-partners.com
                                                                                                                      675 Third Avenue, Floor 10
Investment risk monitoring and valuation                                                                              New York, NY 10017, United States
julian.korek@kinetic-partners.com                                                                                     t: +1 212 661 2200
christian.szylar@kinetic-partners.com
john.collins@kinetic-partners.com                                                                                     Geneva
                                                                                                                      30, Quai Gustave-Ador
                                                                                                                      CH-1207 Genève, Switzerland
                                                                                                                      t: +41 22 715 2840




                                                                      www.kinetic-partners.com




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The opinions expressed herein are those of the authors and other contributors and do not necessarily reflect the views of the Firm.This is not intended as specific legal
advice for any purpose. Kinetic Partners, established in March 2005, is a global professional services firm providing a range of audit & assurance, tax, consulting, forensic,
corporate recovery and corporate finance services solely to the asset management industry.
Kinetic Partners LLP is registered in England and Wales, company number OC311318. Kinetic Financial Services (Ireland) Limited is registered in the Republic of
Ireland, company number 400790. Kinetic Partners US LLP is registered in Delaware. Kinetic Partners Cayman LLP is registered in England and Wales, company number
OC314982. Kinetic Partners Audit LLP is registered in England and Wales, company number OC312728. Kinetic Partners (Switzerland) SA is a société anonyme
registered with the Registre du commerce, Genève, Suisse.

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