Financial Conduct Authority
Market abuse - FCA publishes Decision Notice imposing a prohibition order and fining a former director of a financial spread-betting firm - July 2020
The FCA has published a Decision Notice, dated 14 January 2020, imposing a total prohibition order and a fine of £658,900 in respect of Conor Foley (a former CEO of Worldspreads Limited (WSL) and Worldspreads Group (WSG)) in respect of various market abuse breaches, including the dissemination of false or misleading information under section 118(7) of FSMA 2000.
According to the FCA, in August 2007, Mr Foley was involved in drafting misleading admission documentation ahead of WSG’s flotation on the Alternative Investment Market (AIM) of the London Stock Exchange. Neither the documentation nor the company’s annual accounts mentioned significant loans made by certain WSG executives to WSG and its subsidiaries or an internal strategy which allowed certain WSG subsidiaries to hedge considerable trading exposures internally with company executives.
Additionally, between January 2010 and March 2012, the FCA states that “large spread bets were placed on the shares of WSG on the trading accounts of WSL clients on terms which made statements in WSG’s Annual Accounts as to its credit policy false and misleading. In addition, large spread bets were carried out on two clients’ accounts by Mr Foley himself without the knowledge of the clients and this had the effect, in the view of the FCA, of giving the appearance of greater demand for WSG shares than in fact existed”.
Mr Foley is the last executive of WSL against whom the FCA has taken action following its collapse in March 2012. The FCA fined and banned WSL’s CFO, Niall O’Kelly, and its Financial Controller, Lukhvir Thind, in April 2017 for falsifying critical financial information concerning WSL’s client liabilities and its cash position.
Mr Foley has referred the Decision Notice to the Upper Tribunal, which has the power to dismiss the reference or to remit the matter back to the FCA with directions. Accordingly, the proposed action outlined in the Decision Notice will have no effect pending the determination of the case by the Upper Tribunal.
FCA Decision Notice imposing a prohibition order and financial penalty against a former CEO of Worldspreads Group plc
Press release
Office of the Complaints Commissioner
FCA handling of whistleblowing cases, complaints and deferral process, authorisation and controlled function applications - Complaints Commissioner publishes final reports - July 2020
The Financial Regulators Complaints Commissioner has published several final reports in relation to the FCA, including:
- a report dated 15 June 2020 relating to the FCA’s handling of whistleblowing cases and a perceived lack of progress in pursuing whistleblowing intelligence supplied by a complainant. The FCA agreed to consider the various recommendations made by the Commissioner;
- a final report dated 22 June 2020 concerning the FCA’s deferral process following a complaint about the FCA’s supervision of the LF Woodford Equity Income Fund (WEIF). The FCA deferred its investigation into part of the complaint because it had opened an investigation into the events surrounding the suspension of the WEIF and considered it likely that the ongoing investigation would produce material relevant to the complaint. The Commissioner found that although FCA was entitled to defer the relevant aspect of the complaint, there were deficiencies in the FCA’s complaints processes. Certain recommendations were made, which the FCA has accepted;
- a final report dated 11 June 2020 arising from a complaint, made in November 2018, concerning the lack of progress in the complainant’s application for authorisation of a small payments institution (SPI) in December 2017. The Commissioner upheld the complaint against the FCA, recommending that the FCA offers £200 (in place of the original £100 offered by the regulator) for the distress and inconvenience caused to the complainant. The FCA has accepted the recommendations made by the Commissioner; and
- a final report dated 8 June 2020 arising from a complaint alleging that the FCA made a decision on a Controlled Function application on the basis of limited evidence. The complaint also alleged that the way in which the FCA’s Authorisations Team had conducted the second interview led the FCA to reach a disproportionate outcome. The Commissioner found that the FCA’s overall assessment of the applicant’s fitness and propriety was reasonable and that the interview process was not fundamentally flawed. Therefore, the Commissioner did not uphold the complaint against the FCA but did make certain recommendations which the FCA has accepted. The regulator has committed to produce additional guidance for candidates invited to attend interview on what they can expect.
Complaint on handling of whistleblowing cases FCA00584 (dated 15 June 2020)
FCA response
Complaint on deferral process FCA00725 (dated 22 June 2020)
Complaint on authorisation applications FCA 00566 (dated 11 June 2020)
Complaint on controlled function applications FCA00676 (dated 8 June 2020)
Competition and Markets Authority
Payment Protection Insurance Market Investigation Order 2011 - CMA issues directions and publishes letters regarding non-compliance - 8 July 2020
The Competition and Markets Authority (CMA) has issued directions to Cardif Pinnacle (CP) (part of BNP Paribas) in relation to the firm’s failure to comply with certain provisions of the Payment Protection Insurance Market Investigation Order 2011. The Order requires payment protection insurance (PPI) providers to send annual reminders to customers, setting out information including their policy details and cancellation rights.
In December 2019, CP notified the CMA that it had become aware of issues with its policy management systems. The CMA determined that these issues resulted in errors in customers’ annual reminders regarding the cost of payment protection insurance (PPI). The CMA has issued directions requiring the firm to appoint an independent body to carry out an assurance audit and prepare and comply with an action plan for taking remedial action.
The CMA has also published letters to Lloyds Banking Group plc and Nationwide Building Society following the discovery of breaches of the Order during audits imposed on the banks following previous breaches in 2018 and 2019, respectively. The CMA states that:
- over an eight year period, Lloyds failed to send compliant annual reminders and provided incorrect information to approximately 5,000 PPI customers. Lloyds has committed to write to affected customers to apologise and offer refunds where customers have suffered losses; and
- over a four month period, Nationwide failed to send compliant annual reminders to approximately 3,000 mortgage PPI customers. Nationwide has apologised to all affected customers and has offered a refund of premiums. Affected customers who choose to cancel their policy and receive refunds of premiums will also receive 8% compensatory interest.
Press release: CMA issues directions and publishes letters regarding non-compliance with the Payment Protection Insurance Market Investigation Order 2011
Directions issues to Cardif Pinnacle under the Payment Protection Insurance Market Investigation Order 2011
Cardif Pinnacle action plan
Webpage
Letter from Alistair Thompson (Director of Remedies, Business and Financial Analysis at the CMA) to Lloyds Banking Group plc regarding non-compliance with the Payment Protection Insurance Market Investigation Order 2011
Letter from Alistair Thompson (Director of Remedies, Business and Financial Analysis at the CMA) to Nationwide regarding non-compliance with the Payment Protection Insurance Market Investigation Order 2011
Please see the Banking and Finance section for an item on the CMA publishing a letter regarding a firm’s non-compliance with the Payday Lending Market Investigation Order 2015.
