FINAL NOTICE

Mr Adam Harris trading as BM Motors
Manor Farm
Woodlands Lane
Stoke D'abernon
KT11 3PY


ACTION

1. By way of an application dated 7 April 2015 (“the Application”) Mr Adam Harris

trading as BM Motors (“Mr Harris”) applied under section 55A of the Act for Part
4A permission to carry on the regulated activity of limited permission lending.

2. The Application is incomplete.

3. For the reasons listed below, the Authority has refused the Application.

SUMMARY OF REASONS

4. By its Warning Notice dated 16 June 2016 (“the Warning Notice”) the Authority

gave notice that it proposed to refuse the Application and that Mr Harris was
entitled to make representations to the Authority about that proposed action.

5. As no representations have been received by the Authority from Mr Harris within

the time allowed by the Warning Notice, the default procedures in paragraph
2.3.2 of the Authority’s Decision Procedure and Penalties Manual apply,

permitting the Authority to treat the matters referred to in its Warning Notice as
undisputed and, accordingly, to give a Decision Notice.

6. By its Decision Notice dated 12 July 2016 (“the Decision Notice”) the Authority

gave Mr Harris notice that it had decided to take the action described above.

7. Mr Harris had 28 days from the date the Decision Notice was given to refer the

matter to the Upper Tribunal (formerly known as the Financial Services and
Markets Tribunal). No referral was made to the Upper Tribunal within this period
of time or to date.

8. Under section 390 (1) of the Act, the Authority, having decided to refuse the

Application and there having been no reference of that decision to the Tribunal,
must give Mr Harris Final Notice of its refusal.

9. The Authority decided to refuse the Application and to give this Final Notice as Mr

Harris has failed to provide the information required by the Authority and, in the
absence of the information sought, the Authority cannot ensure that Mr Harris will
satisfy, and continue to satisfy, the threshold conditions set out in Schedule 6 of
the Act.

10. Mr Harris failed to respond to three separate requests for the provision of

information considered, by CAD, to be necessary to allow the Application to be
determined.

11. These requests were made on 10 July, 22 July and 17 August 2015 and, despite

eight total requests, three of which were formal chasers, sent between 16 August
and 16 September 2015, this information remained outstanding.

12. The Authority therefore determined the Application based upon the information

received to date, in circumstances where its requests for information had not
been met. Having reviewed that information, the Authority could not be sure that
Mr Harris satisfied, and would continue to satisfy, the threshold conditions.

13. Authorised firms (and those seeking authorisation) are expected to engage with

the Authority in an open and cooperative way. The failure to provide the
information raised concerns that Mr Harris would not do so if the Application were
to be granted.

14. The failure to provide the information raised concerns as to whether Mr Harris:

(1)
could be effectively supervised by the Authority as required by threshold
condition 2C (Effective Supervision);

(2)
had appropriate human resources, given his failure to provide the
Authority with the information as required by threshold condition 2D
(Appropriate Resources); and

(3)
would conduct his business with integrity and in compliance with proper
standards as required by threshold condition 2E (Suitability).

DEFINITIONS

15. The definitions below are used in this Final Notice.

“the Act” means the Financial Services and Markets Act 2000

“the Authority” means the body corporate previously known as the Financial
Services Authority and renamed on 1 April 2013 as the Financial Conduct
Authority

“CAD” means the Credit Authorisations Division.

FACTS AND MATTERS

16. The Application was received on 7 April 2015.

17. Further information was requested from Mr Harris under section 55U(5) of the

Act. Details of all the communications between the Authority and Mr Harris are
set out below.

(1)
On 2 July 2015 the Authority spoke by telephone with Mr Harris for further
clarification of his proposed regulated activities and the permissions he
would require. During this call, Mr Harris stated that he does not lend to
customers but instead introduces them to brokers or to other lenders. The
Authority stated that this could constitute credit broking rather than
lending activity. During the telephone conversation Mr Harris also stated
that his projected income figure provided in the Application included car
sales. The Authority explained that this should not be included in the
projected income figure and stated that it would send an email to Mr Harris
setting out a description of what should be included in that figure, which
Mr Harris could then update as necessary.

(2)
On 10 July 2015, the Authority sent Mr Harris that email requesting further
information as to the permissions he requires for his business and his
revised projected income. The Authority provided a deadline of 17 July
2015. Mr Harris did not respond to this email.

(3)
On 21 July 2015, the Authority unsuccessfully attempted to contact Mr
Harris by telephone. The Authority left a voicemail message that day
erroneously asking for a response to the Authority's email by 20 July 2015.
Notwithstanding that small error, there was no reply from Mr Harris.

(4)
On 22 July 2015, the Authority sent a further email to Mr Harris requesting
the information, and also queried whether Mr Harris might need additional
permissions for his part-exchange activities. The Authority provided a
deadline of 27 July 2015 for Mr Harris to respond. Mr Harris did not
respond to this email.

(5)
On 17 August 2015, the Authority sent an email to Mr Harris requesting
the information, and providing a deadline of 24 August 2015 for Mr Harris
to respond. Mr Harris did not respond to this email.

(6)
After 9 weeks, the Authority had still received no response to its request
for the information.

(7)
On 16 September 2015, the Authority sent an email to Mr Harris informing
him that a failure to provide the outstanding information would result in
the Application being determined based upon the information received to
date and that this might result in a recommendation to the Authority’s
Regulatory Transactions Committee (“RTC”) that it issue Mr Harris with a
Warning Notice proposing to refuse the Application. No response was
received to this letter by the stated deadline of 30 September 2015 (i.e.
within 14 days).

(8)
On 30 September 2015, the Authority telephoned Mr Harris but he did not
answer. The Authority left him a voicemail message noting the lack of a
response and, informing him that the Application was no longer being
processed and that he would need to contact the Authority if he wanted to
be authorised.

(9)
On 1 October 2015, the Authority wrote to Mr Harris, noting the lack of a
response to its email of 16 September 2015 and reiterating that a failure
to provide the outstanding information would result in the Application
being determined based upon the information received to date. The letter
again noted that a failure to reply might result in a recommendation to the
RTC that it issue Mr Harris with a Warning Notice proposing to refuse the
Application.

(10)
The Authority’s 1 October 2015 letter was not delivered to Mr Harris.
Royal Mail cited “refused” as the reason it was unable to deliver the letter.

(11)
The Authority self-evidently did not receive a response to this letter by the
stated deadline of 15 October 2015 (i.e. within 14 days).

(12)
On 16 October 2015, the Authority wrote to Mr Harris, noting the lack of a
response to, inter alia, its previous email of 16 September 2015 and letter
of 1 October 2015 and reiterated that a failure to provide the outstanding
information would result in the Application being determined based upon
the information received to date. The letter again noted that this might
result in a recommendation to the RTC that it issue Mr Harris with a
Warning Notice proposing to refuse the Application.

(13)
The 16 October 2015 letter was not delivered to Mr Harris. Royal Mail
cited “not called for” as the reason it was unable to deliver the letter.

(14)
No response was received to the 16 October 2015 letter by the stated
deadline of 30 October 2015 (i.e. within 14 days).

(15)
From 2 July 2015 the Authority did not receive a response to any of the
communications
set
out
above
requesting
the
information.
The

information provided by Mr Harris in the Application was insufficient to
enable the Authority to determine the Application.

(16)
By its Warning Notice dated 16 June 2016 the Authority gave notice that it
proposed to refuse the Application and that Mr Harris was entitled to make
representations to the Authority about that proposed action.

(17)
No response was received to the 16 June 2016 Warning Notice by the
stated deadline of 11 July 2016 (i.e. within 25 days).

(18)
By its Decision Notice dated 12 July 2016 the Authority gave notice that it
proposed to refuse the Application and that Mr Harris was entitled to make
representations to the Authority about that proposed action.

18. No response was received to the 12 July 2016 Decision Notice by the stated

deadline of 10 August 2016 (i.e. within 28 days).

19. The Authority received no response to any of the communications set out above.

IMPACT ON THRESHOLD CONDITIONS

20. The regulatory provisions relevant to this Final Notice are referred to in Annex A.

21. Mr Harris failed to respond to eight separate requests for the provision of

information considered, by the Authority, to be necessary to allow the Application
to be determined. Three of these requests were made over a 4 week period (16
September – 16 October 2015); the initial request was sent by email whilst the
second and third requests were sent both by email and Special Delivery. Each of
those three requests included a statement to the effect that if Mr Harris continued
to fail to provide the requested information, CAD would recommend to the RTC
that it issue Mr Harris with a Warning Notice proposing to refuse the application.

22. The Authority therefore determined the Application based upon the information

received to date, in circumstances where its requests for information had not
been met. Having reviewed that information, the Authority could not be sure that
Mr Harris satisfied, and would continue to satisfy, the threshold conditions.

23. Authorised firms (and those seeking authorisation) are expected to engage with

the Authority in an open and cooperative way. The failure to provide the
information raised concerns that Mr Harris would not do so if the Application were
to be granted.

24. The failure to provide the information raised concerns as to whether Mr Harris:

(1)
could be effectively supervised by the Authority as required by threshold
condition 2C (Effective Supervision). Mr Harris’ failure to provide the
Authority with the information called into question whether the Authority
would be able to obtain (on an on-going basis) sufficient information about
his activities such that the Authority would be able to effectively supervise
him;

(2)
had appropriate human resources, given Mr Harris’ failure to provide the
Authority with the information as required by threshold condition 2D
(Appropriate Resources); and

(3)
would conduct his business with integrity and in compliance with proper
standards as required by threshold condition 2E (Suitability). The failure
by Mr Harris to supply the information meant that he was not being open
and co-operative with the Authority or demonstrating that he was ready,
willing and organised to comply in his dealings with the Authority.

25. On the basis of the facts and matters described above, in particular the failure to

provide the information sought, the Authority has concluded that it cannot ensure
that Mr Harris will satisfy, and continue to satisfy, the threshold conditions in
relation to all of the regulated activities for which Mr Harris would have
permission if the application was granted.

IMPORTANT NOTICES

26. This Final Notice is given under section 390 (1) of the Act.

27. Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of

information about the matter to which this Notice relates. Under those provisions,
the Authority must publish such information about the matter to which this Notice
relates as the Authority considers appropriate. The information may be published
in such manner as the Authority considers appropriate. However, the Authority
may not publish information if such publication would, in the opinion of the
Authority, be unfair to you or prejudicial to the interests of consumers or
detrimental to the stability of the UK financial system.

28. The Authority intends to publish such information about the matter to which this

Final Notice relates as it considers appropriate.

Authority contacts

29. For more information concerning this matter generally, contact Kate Pitt,

Manager, Credit Authorisations Division at the Authority (direct line: 020 7066
0714 / email: kate.pitt@fca.org.uk).

Lucy Castledine
on behalf of the Regulatory Transactions Committee

ANNEX A – REGULATORY PROVISIONS RELEVANT TO THIS FINAL NOTICE

1. Section 55A(1) of the Act provides for an application for permission to carry on

one or more regulated activities to be made to the appropriate regulator. Section
55A(2) defines the “appropriate regulator” for different applications.

2. Section 55B(3) of the Act provides that, in giving or varying permission, imposing

or varying a requirement, or giving consent, under any provision of Part 4A of the
Act, each regulator must ensure that the person concerned will satisfy, and
continue to satisfy, in relation to all of the regulated activities for which the
person has or will have permission, the threshold conditions for which that
regulator is responsible.

3. The threshold conditions are set out in schedule 6 of the Act. In brief, the

threshold conditions relate to:

(1)
Threshold condition 2B: Location of offices

(2)
Threshold condition 2C: Effective supervision

(3)
Threshold condition 2D: Appropriate resources

(4)
Threshold condition 2E: Suitability

(5)
Threshold condition 2F: Business model

Relevant provisions of the Authority’s Handbook

4. In exercising its powers in relation to the granting of a Part 4A permission, the

Authority must have regard to guidance published in the Authority Handbook,
including the part titled Threshold Conditions (“COND”). The main considerations
in relation to the action specified are set out below.

Threshold condition 2D: Adequate Resources

5. COND 1.3.2G(2) states that, in relation to threshold conditions 2D to 2F, the

Authority will consider whether a firm is ready, willing and organised to comply
on a continuing basis with the requirements and standards under the regulatory
system which will apply to the firm if it is granted Part 4A permission.

6. COND 2.4.2G(2) states that the FCA will interpret the term 'appropriate' as

meaning sufficient in terms of quantity, quality and availability, and 'resources' as
including all financial resources (though only in the case of firms not carrying on,
or seeking to carry on, a PRA-regulated activity), non-financial resources and
means of managing its resources; for example, capital, provisions against
liabilities, holdings of or access to cash and other liquid assets, human resources
and effective means by which to manage risks.

Threshold condition 2E: Suitability

7. COND 2.5.2G(2) states that the FCA will also take into consideration anything

that could influence a firm's continuing ability to satisfy the threshold conditions
set out in paragraphs 2E and 3D of Schedule 6 to the Act. Examples include the

firm's position within a UK or international group, information provided by
overseas regulators about the firm, and the firm's plans to seek to vary its
Part 4A permission to carry on additional regulated activities once it has been
granted that permission.

8. COND 1.3.3BG provides that, in determining whether the firm will satisfy, and

continue to satisfy, the FCA threshold conditions, the FCA will have regard to all
relevant matters, whether arising in the United Kingdom or elsewhere.

9. COND 1.3.3CG provides that, when assessing the FCA threshold conditions, the

FCA may have regard to any person appearing to be, or likely to be, in a relevant
relationship with the firm, in accordance with section 55R of the Act (Persons
connected with an applicant). For example, a firm's controllers, its directors or
partners, other persons with close links to the firm (see COND 2.3), and other
persons that exert influence on the firm which might pose a risk to the firm's
satisfaction of the FCA threshold conditions, would be in a relevant relationship
with the firm.

10. COND 2.5.6G provides that examples of the kind of particular considerations to

which the FCA may have regard when assessing whether a firm will satisfy, and
continue to satisfy, this threshold condition include, but are not limited to,
whether:

-
the firm has been open and co-operative in all its dealings with the FCA
and is ready, willing and organised to comply with the requirements and
standards under the regulatory system in addition to other legal,
regulatory and professional obligations.

Threshold condition 2F: Business Model

11. COND 2.7.7G states that, in assessing whether the threshold conditions set out in

paragraphs 2F and 3E of Schedule 6 to the Act are satisfied, the FCA may
consider all matters that might affect the design and execution of a firm's
business model, taking into account the nature, scale and complexity of a firm's
business.

12. COND 2.7.8G states that, in deciding how they will satisfy and continue to satisfy

the threshold conditions set out in paragraphs 2F and 3E of Schedule 6 to the Act,
firms should consider matters including (but not limited to) the following:

(1)
the assumptions underlying the firm's business model and justification for
it;

(2)
the rationale for the business the firm proposes to do or continues to do,
its competitive advantage, viability and the longer-term profitability of the
business;

(3)
the needs of and risks to consumers;

(4)
the expectations of stakeholders, for example, shareholders and
regulators;

(5)
the products and services being offered and product strategy;

(6)
the governance and controls of the firm and of any member of its group (if
appropriate);

(7)
the growth strategy and any risks arising from it;

(8)
any diversification strategies; and

(9)
the impact of the external macroeconomic and business environment.