Enforcement

FR1201 / 5 April 2023

Prudential Regulation Authority 

Wyelands Bank Plc - PRA publishes Final Notice and imposes public censure - 4 April 2023

The PRA has Wypublished a final notice on Wyelands Bank Plc (Wyelands). Wyelands, part of the Gupta Family Group Alliance (GFG), entered into four sets of structured finance transactions, each of which had a value representing a significant proportion of its capital and material exposures to counterparties connected to GFG. In the final notice, the PRA states that, between 21 December 2016 and 28 May 2020, Wyelands contravened:

  • PRA Fundamental Rule 3 (a firm must act in a prudent manner);
  • PRA Fundamental Rule 5 (a firm must have effective risk strategies and risk management systems);
  • PRA Fundamental Rule 6 (a firm must organise and control its affairs responsibly and effectively);
  • Articles 393, 394 and 395 of Part IV of the Capital Requirements Regulation (575/2013/EU) (CRR);
  • General Organisational Requirements Rules 2.1 and 5.1 of the PRA Rulebook;
  • Record Keeping Rule 2.1 of the PRA Rulebook;
  • Risk Control Rule 3.4 of the PRA Rulebook;
  • Related Party Transaction Risk Rule 2.3 of the PRA Rulebook; and
  • Own Initiative Requirements (“OIREQ”) imposed by the PRA under section 55M of the Financial Services and Markets Act 2000.

In relation to the level of financial penalty, Wyelands, which is in wind down, provided evidence to the PRA that payment of a penalty would cause the firm serious financial hardship. Therefore, the PRA reduced the financial penalty to nil and, instead, imposed a public censure.

PRA Final Notice: Wyelands Bank Plc

Press release

Financial Conduct Authority 

Unfair terms in insurance broker contract - FCA publishes Notice of Undertaking from Policy Excess Insure Limited (trading as Nova Direct) - 31 March 2023

The FCA has published a Notice of Undertaking from Policy Excess Insure Limited, trading as Nova Direct, under the Consumer Rights Act 2015 (CRA 2015) concerning terms in its insurance broker contract for the sale of motor breakdown, home emergency, home appliance, gadget bicycle and travel insurance policies entered into from 1 October 2015.

Pursuant to the undertaking, Policy Excess Insure Limited has undertaken to redraft three terms in its insurance broker contract, following FCA concerns and conclusions that these terms were likely to be considered unfair. These terms and the basis for FCA’s unfairness conclusions were as follows:

  • a continuous payment authority (CPA): this did not clearly reflect that the CPA is only in relation to collecting sums due for insurance premiums, as and when they fall due. The FCA is concerned that, as drafted, the term was likely to be considered unfair because it had the potential to give the firm the ability to charge consumers unspecified amounts at the firm’s discretion;
  • cancellation: this stated that the premium would not be refunded to consumers for automatically renewed policies, where consumers cancelled in advance of the policy start date. In addition, the term stated that there would not be a 14-day cooling-off period for policies which had automatically renewed. The FCA has concerns that this term was likely to be considered unfair because it allowed the firm to retain premiums paid by consumers for services they would not receive. The FCA also raised concerns that this term was likely to be considered unfair because it allowed the firm to retain premiums paid by customers for a service they would not receive and did not allow a 14-day cooling-off period for policies that had automatically renewed, in contravention of the requirements under ICOBS; and
  • automatic renewals: this purported to allow the firm to charge consumers an administration fee for not renewing the policy. The FCA was concerned that this term was likely to be considered unfair as consumers would not expect to pay a fee to exit their contracts at the end of their policy and should not have to pay a fee to avoid entering into a new contract, particularly in the context of automatic enrolment in the new contract.

Policy Express has indicated it will carry out the contract revisions with the assistance of a compliance firm.

Notice of Undertaking

Defrauding investors - FCA commences criminal proceedings - 5 April 2023 

The FCA has commenced criminal proceedings against four individuals for: (i) conspiracy to commit fraud; and (ii) conspiracy to carry out regulated activity without authorisation. The FCA alleges that, over a two year period between February 2017 and June 2019, the individuals defrauded investors out of approximately £1.4 million using investment schemes that were not genuine.

Specifically, the FCA alleges:

  • between 1 February 2017 and 19 June 2019 Raymondip Bedi, Patrick Mavanga, Nicholas Harper, and Rowena Bedi, conspired to defraud others by persuading them to invest with Capital Partners Group, CCX Capital, Alexander Growth Capital Ltd, Astaria Group LLP and Ian Buckley Financial Services on the basis of false representations;
  • between 1 July 2016 and 19 June 2019 Mr Bedi, Mr Mavanga, Mr Harper and Ms Bedi conspired together to contravene the general prohibition (carrying on a regulated activity without authorisation);
  • on 6 March 2019 Mr Bedi and Ms Bedi were in possession of criminal property, namely £78,500 in cash which was seized from their home address;
  • between 1 March 2018 and 1 January 2020 Mr Bedi laundered at least £114,870 in cash via deposits to his bank account;
  • between 1 February 2017 and 19 June 2019 Mr Mavanga was in possession, with an improper intention, of a number of identification documents that belonged to others; and
  • between 5 March 2019 and 14 March 2019 Mr Mavanga perverted the course of justice by arranging the deletion of telephone call recordings.

Two of the defendants were remanded in custody and two are on conditional bail ahead of a first appearance at Southwark Crown Court on 2 May 2023.

Press release