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FINAL NOTICE

ACTION

1. By an application dated 31 July 2019, All Accident Claims Limited (“AAC”) applied under

section 55A of the Act for Part 4A permission to carry on the regulated activity of seeking

out, referrals and identification of claims or potential claims.

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 19 October 2020 (the “Warning Notice”) the Authority gave

notice that it proposed to refuse the Application and that AAC was entitled to make

representations to the Authority about that proposed action.

5. As no representations have been received by the Authority from AAC within the time

allowed by the Warning Notice, the default procedures in paragraph 2.3.2 of the

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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 18 November 2020 (the “Decision Notice”), the Authority

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

7. AAC 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 AAC Final

Notice of its refusal.

9. For the reasons set out herein, the Authority cannot ensure that AAC will satisfy, and

continue to satisfy, the threshold conditions set out in Schedule 6 of the Act.

10.AAC has failed on a number of occasions to provide documentation that is pivotal to the

Application, giving rise to concerns that, if authorised, it will not meet the standards set

out in Principle 11 of the Authority’s Handbook of being open and honest with the

regulator, and that it cannot be effectively supervised. Further, as a result of the quality

of the documentation that has been provided, AAC has not demonstrated that it has

adequate human resources who are sufficiently competent. Additionally, despite being

requested to do so on a number of occasions, AAC has failed to confirm that it has call

recording in place. Call recording is mandatory for claims management firms, pursuant

to CMCOB 2.3.2R.

11. AAC has provided incorrect, inconsistent and unsubstantiated financial information to the

Authority, which calls into question the credibility of the information. The Authority is

therefore unable to rely upon the financial information in its assessment of the

Application. Additionally, AAC has negative ‘capital and reserves’ and has been loss-

making for at least the past two financial years. It has not provided any credible plans to

demonstrate that it is financially viable on an ongoing basis.

12.In light of the above, the Authority considers that AAC has not demonstrated that it is

ready, willing and organised to comply with the regulatory regime. Accordingly, the

Authority cannot ensure that, if the Application was granted, AAC would satisfy, and

continue to satisfy, threshold conditions 2C (Effective supervision), 2D (Appropriate

resources), 2E (Suitability) and 2F (Business model).

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13.In light of the above, the Authority has refused the Application.

DEFINITIONS

14. The definitions below are used in this Final Notice:

“AAC” means the applicant, All Accident Claims Limited.

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

“the Application” means the application referred to in paragraph 1 above.

“the Authority” means the body corporate previously known as the Financial Services

Authority and renamed on 1 April 2013 as the Financial Conduct Authority.

“CMCOB” means the Claims Management: Conduct of Business section of the Authority’s

handbook.

“COND” means the Threshold Conditions section of the Authority’s handbook.

the “Decision Notice” means the decision notice dated 18 November 2020 given to AAC

by the Authority.

“SUP” means the Supervision section of the Authority’s handbook.

“the Tribunal” means the Upper Tribunal (Tax & Chancery Chamber).

the “Warning Notice” means the warning notice dated 19 October 2020 given to AAC by

the Authority.

FACTS AND MATTERS

Background to the firm

15. AAC is a claims management company that was incorporated on 3 April 2014. Between

2 July 2014 and 31 March 2019, it was regulated by the Claims Management Regulator.

16. On 1 April 2019, AAC became regulated by the Authority under its Temporary Permission

Regime. AAC applied for full permission on 31 July 2019.

Inadequate information

17. AAC submitted with the Application the individual form for Mr Asghar and a business plan.

AAC indicated in the Application that it would send later its opening balance sheet,

forecast closing balance sheet, monthly cashflow forecast, monthly profit and loss

forecast, annual accounts, and a compliance monitoring document. The Authority

therefore first requested the missing documents, as well as a pre-contractual information

document, and a compliance procedure document1, on 9 September 2019, asking for a

response by 16 September 2019.

18. AAC failed to provide the requested documents by the deadline and instead requested

more time to respond.

19. However, AAC failed to provide the requested documents by the extended deadline, and

the Authority therefore sent a letter to AAC on 21 November 2019 requesting the missing

documents by 6 December 2019.

20. AAC failed to provide the requested documents by the extended deadline. The Authority

therefore chased for a response by way of an updated information request letter dated 9

December 2019. The letter set out that AAC was still required to provide the following

documents by 23 December 2019: opening balance sheet; closing balance sheet;

projected monthly cash flow; projected monthly profit and loss; annual accounts;

compliance monitoring document; and compliance procedure document.

21. AAC failed to respond. The Authority therefore sent a letter to AAC on 9 January 2020

again requesting the missing documents. The letter requested a response by 23 January

2020.

22. On 15 January 2020 AAC emailed the Authority, providing annual accounts as at 30 April

2018, a notice of privacy and a complaints policy. The complaints policy incorrectly refers

to the Legal Ombudsman and Claims Management Regulator, whereas it should refer to

the Authority and the Claims Management Ombudsman.

23. With the exception of the annual accounts, none of the documents previously requested

by the Authority on numerous occasions had been provided at this point by AAC.

24. On 18 March 2020, the Authority telephoned AAC to set out its concerns with both the

Application and the information provided during the application process. The Authority

sent an email to AAC on the same day confirming the details of the telephone call, and

requested outstanding and further information by 1 April 2020 (namely, the outstanding

financial documents, vulnerable customers’ policy (a document which the Application

states AAC does not have), compliance monitoring plan and updated complaints’

1 The Authority at the time requested pre-contractual information and compliance procedures, as those are required for

firms applying for the permission of advice, investigation or representation in relation to a personal injury claim. It

became apparent later in the application process that AAC had requested the advising permission in error.

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procedure). As it is a requirement under CMCOB 2.3.2R that a firm such as AAC has call

recording in place, the Authority also asked AAC to confirm that it records calls.

25. AAC failed to provide the requested documents or confirmation of call recording, and so

the Authority emailed AAC on 7 April 2020 to request an update. AAC responded on the

same day, stating that AAC’s office is closed due to Covid-19 and the sole director and

shareholder (Mr Asghar) is in self-isolation. AAC apologised for the delay and was unable

to provide a timeline for a response.

26. Over two months later, on 16 June 2020, AAC had still failed to provide the requested

documents or confirmation of call recording. The Authority therefore telephoned AAC to

seek an update on its situation. Mr Asghar confirmed the business was now open following

his earlier illness and that AAC would provide the outstanding documents by 19 June

2020.

27. The Authority emailed AAC on 16 June 2020 confirming the content of the telephone call

that day and requesting the outstanding documents by 19 June 2020.

28. One day before the deadline, on 18 June 2020 AAC requested an extension to 26 June

2020 on account of AAC’s office having just opened. The Authority agreed to this

extension.

29. On 23 June 2020 AAC emailed the Authority, providing the following documents: financial

accounts for the year to 30 April 2019; complaints procedure; vulnerable customer

policy; three introducer agreements between AAC and firms of solicitors; and a monthly

cash flow forecast.

30. The complaints procedure provided on 23 June 2020 made no reference to the right of

the consumer to refer their complaint to the Financial Ombudsman Service (or Claims

Management Ombudsman). This is despite the fact that, over two months before the

complaints procedure was provided, the Authority informed AAC on 18 March 2020 that

the complaints policy should refer to the Authority and the Claims Management

Ombudsman, and requested an updated complaints procedure.

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31. The introducer agreements provided suggest AAC is operating a recommendation model2,

and not a damages based agreement3 model as previously stated by AAC during the

telephone call on 18 March 2020. AAC has therefore provided inconsistent information on

which model it is operating, suggesting that it is unaware itself.

32. On 26 June 2020 AAC provided a document entitled ‘compliance monitoring programme’.

However, the document is inadequate as it fails to explain how AAC monitors compliance

with the rules and regulations that apply to it.

33. Whilst a number of documents had been provided by AAC on 23 and 26 June 2020, it

had failed to provide a monthly profit and loss forecast, or opening and closing balance

sheet. These documents had been requested on numerous occasions since 9 September

2019 by the Authority.

34. On 13 July 2020, the Authority telephoned AAC to discuss its concerns with the

Application. The telephone call focussed on the Authority’s concerns with the general

solvency of AAC, and is detailed further at paragraph 51 below. The email sent to AAC

the same day noted that:

a.
AAC had still failed to provide a monthly profit and loss forecast, and opening

and closing balance sheets;

b.
AAC had still failed to provide a compliance monitoring plan, and that the

compliance procedures provided did not demonstrate how AAC will ensure it

meets the applicable rules and regulations on an ongoing basis; and

c.
AAC’s complaints policy made no reference to the Financial Ombudsman

Service/Claims Management Ombudsman.

35. The Authority asked AAC to provide by 16 July 2020 information to demonstrate it meets

the threshold conditions.

2 In a recommendation model, a firm receives remuneration directly from the solicitor based on the rates quoted in each

agreement per referral. Under these arrangements, no money passes from the customer to the firm, and no customer

information passes from the firm to the solicitors. The firm provides the solicitor’s details to the customer, who then

chooses whether or not to contact them.

3 An agreement between a client and a solicitor whereby the solicitor’s fees are only payable in the event of a successful

claim.

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36. On 16 July 2020, AAC sent an email to the Authority, attaching three documents: a single

page document entitled ‘All Accident Claims Ltd – balance sheet as at 30 April 2020’; a

compliance monitoring programme; and a complaints procedure.

37. The updated complaints procedure, in contrast to the one provided on 23 June 2020, now

explains that customers can refer their complaint to the Claims Management Ombudsman

if they are not satisfied with AAC’s response. The Authority notes that the complaints

procedure was amended by AAC only after the Authority pointed out the error to AAC by

email dated 13 July 2020.

38. To date, AAC has not confirmed that it has call recording in place, as required by CMCOB

2.3.2R. The Authority requested this confirmation on 18 March 2020, and did not receive

a response.

39. The Authority reminded AAC on 4 September 2020, that it has still not confirmed that it

has call recording in place and that a monthly profit and loss forecast remained

outstanding. As of the date of this Notice, no response has been received.

40. On 18 September 2020, the Authority asked AAC to provide Mr Asghar’s skills gap

analysis, and learning and development plan. This request was made as the Statement

of Responsibilities form in relation to the director’s SM&CR application and the associated

Form A application did not contain supporting documents as required in section 6.03 of

the Form A. Although some of the documents requested may not be relevant to AAC

owing to its size and nature of business (for example, an organisation chart and induction

programme), the Authority would expect some reference to the candidate’s skills gap

analysis and learning and development plan. Despite this, AAC had made no reference to

how Mr Asghar has identified any gaps in knowledge, or to how Mr Asghar will improve

his knowledge over time.

41. AAC failed to respond by the requested deadline of 24 September 2020. The Authority

therefore telephoned and emailed AAC on 25 September 2020, confirming a revised

deadline for AAC to respond by close of business on 28 September 2020.

42. AAC emailed the Authority on 28 September 2020, stating that it is unable to provide any

further information. No explanation was provided for AAC’s failure, or an indication that

it would provide the requested information on a future date. Therefore, the information

requested on 18 September 2020 remains outstanding.

43. Finally, some of the information contained in the Application is inconsistent with

information provided elsewhere and/or the Authority’s understanding of AAC’s business

model. Whilst individually, the items listed below may be considered to be minor errors,

they collectively indicate a lack of understanding and/or lack of care on behalf of AAC:

a.
The Application states that AAC does not deal with eligible complainants4.

However, the Authority’s understanding of AAC’s business model is that it

deals with consumers, and therefore does in fact deal with eligible

complainants.

b.
The Application indicated that AAC does not meet the Location of Offices

threshold condition (2B). However, it notes in the same section that “we are

limited company with one office in UK”.

c.
According to information filed with Companies House, Mr Waheed Asghar is

the sole shareholder. The Application states that AAC has no controllers, while

the some of the financial accounts indicate Mr Asghar is a joint equal

shareholder with another individual.

Financial resources

44. In relation to threshold condition 2D (Appropriate resources), the Authority has

considered whether AAC satisfies the general solvency requirement in CMCOB 7.2.1R and

is able to meet its debts as they fall due now, not at some date in the future.

45. The annual accounts provided by AAC on 15 January 2020 show that as at 30 April 2018,

it had capital and reserves of minus £15,648, and for the year to 30 April 2018 it made

a net loss of £2,266.

46. In the telephone call between the Authority and AAC on 18 March 2020, the Authority

noted the following (which were confirmed by email later that day):

a.
AAC’s latest accounts at 30 April 2019 filed with Companies House show capital

and reserves of negative £16,682 (2018: negative £15,648).

b.
The same accounts also show AAC made a loss for the financial year ending

30 April 2019 of £1,034 (2018: loss of £2,266).

c.
Firms that want to hold permission for seeking out, referrals and identification

of claims or potential claims, must demonstrate they can meet the general

solvency requirement in CMCOB 7.2.1R.

4 A person eligible to have a complaint considered under the Financial Ombudsman Service, as defined in DISP 2.7.

47. AAC responded to the Authority’s concerns by stating that the business had just moved

into new premises.

48. Due to the concerns discussed with AAC, the Authority requested that AAC provide by 1

April 2020 an explanation of how, and by when, it intends to demonstrate that it meets

its prudential requirements, as set out in CMCOB 7.2.1R. AAC’s response was delayed

due to the closure of its office. It subsequently provided further information when its

office reopened:

a.
in a telephone call on 16 June 2020, AAC stated that it may still have an issue

with solvency and that it had secured a loan from the Government (which the

Authority understood to be in relation to Covid-19); and

b.
on 26 June 2020, AAC stated that its losses for 2019 were “more than 50%

less” than for 2018, and that it intended to meet its liabilities as they fell due

by reducing its fixed costs and overhead charges.

49. The accounts provided by AAC, cashflow, and email of 26 June 2020, do not contain

information to satisfy the Authority that it meets the general solvency requirement in

CMCOB 7.2.1R. Although the format of the accounts provided by AAC differs from the

version filed with Companies House, both sets of accounts demonstrate that AAC:

a.
as at 30 April 2019, had negative capital and reserves of £16,682; and

b.
for the period to 30 April 2019, made a loss of £1,034.

50. The cashflow and email of 26 June 2020 do not alter the financial position set out in the

accounts ending on 30 April 2019.

51. In the telephone call between the Authority and AAC on 13 July 20205, the Authority

stated that it remained concerned that AAC had not demonstrated that it satisfies the

appropriate resources threshold condition, due to the deficit on the accounts. In response,

AAC explained that it:

a.
had moved to a new office and bills had reduced as a result;

5 The Authority notes that it referred AAC to the prudential rules in CMCOB 7.3. However, as a lead generator, these

rules do not apply to AAC and the Authority therefore informed AAC of this by email dated 18 September 2020.

Nonetheless, AAC is still required to meet the general solvency requirement in CMCOB 7.2.1R and be able to meet its

liabilities as they fall due in accordance with threshold condition 2D.

b.
had secured a loan of £40,000 from the Government, to be paid back over 6

years, with no interest or payments in the first year; and

c.
intended to invest the loan into the business, and increase income through

advertising.

52. The Authority considers that the Government loan is unlikely to correct the deficit on the

accounts because even though the loan improves the assets position (by adding £40,000

in cash), it would add an equal and corresponding amount in the liabilities. It would

therefore not improve AAC’s net balance sheet position.

53. In relation to financial documents provided by AAC on 16 July 2020, the Authority notes

the following discrepancies, inconsistencies and unexplained information:

a.
The balance sheet as at 30 April 2020, contains a profit and loss figure under

Capital and Reserves of £38,195. This gives AAC a capital and reserves total

of £11,513. This compares to the balance sheet at 30 April 2019, which

showed negative capital and reserves of £16,682.

b.
The balance sheet as at 30 April 2020 also contains a cash at bank and in hand

figure of £23,450, compared to the previous year’s cash at bank figure of £358

(an increase of £23,092). The trade debtors figure on the balance sheet at 30

April 2020 is £12,000, compared to the previous year, when the debtors figure

was minus £3,698 (an increase of £15,698). The total increase in cash and

debtors over the year is therefore £38,790. The information provided by AAC

fails to explain these large changes.

c.
The balance sheet at 30 April 2020 contains several arithmetic errors. For

example, the Net Current Assets/Liabilities, based on the numbers above it, is

£19,838. The amount actually given on the balance sheet is £20,888, which is

therefore overinflated by £1,050. Also, based on the numbers above it, the

total Capital and Reserves is £21,513. The amount actually given on the

balance sheet is £11,513, and is therefore £10,000 less than the total of the

numbers above it. The errors on the balance sheet also mean that it does not

balance, as the top half totals £11,513, and the bottom half totals £21,513.

54. In light of the errors on the balance sheet at 30 April 2020, and there being no apparent

explanation for the large increase in profit, the Authority is not satisfied that AAC has

demonstrated it has sufficient financial resources to meet the general solvency

requirement in CMCOB 7.2.1R.

55. Due to the ongoing concerns with the financial information provided by AAC, the Authority

telephoned AAC on 27 July 2020 to provide AAC with a final opportunity to respond to

the concerns about its financial situation. The Authority confirmed the details of the

telephone call in an email sent the same day to AAC. Matters discussed included the

a.
The Authority noted that the latest accounts for the year ending 30 April 2020

show a large swing to profitability compared to the previous year. AAC stated

that this was as a result of it receiving the loan from the Government, without

which it estimated the profits for the year to 30 April 2020 to be £8,000 to

b.
The Authority noted arithmetical errors on the latest balance sheet. AAC

agreed that there is a calculation error on the latest accounts.

c.
The Authority explained that it is concerned the information provided on the

accounts is incorrect and that the information does not appear to have been

checked by AAC before being provided.

56. The Authority requested that AAC provide information to substantiate AAC’s large swing

from losses to profitability by 30 July 2020. In relation to this request:

a.
The Authority contacted AAC by telephone on 30 July 2020 to ask whether it

intended to respond by the deadline of that day. AAC stated that it was

preparing updated profit figures and was hoping to send the information to the

Authority by 3 August 2020. AAC failed to respond by 3 August 2020.

b.
On 19 August 2020, the Authority emailed AAC noting the lack of response

and providing an extended deadline of 21 August 2020.

c.
On 21 August 2020 AAC responded by email, attaching a document entitled

‘All Accident Claims Ltd – Annual Report & Accounts for the period 1 May 2020

to 31 July 2020’. Only one page of that document contains financial

information, entitled ‘profit and loss account for the period 1 May 2020 to 31

July 2020’. The document indicated AAC had made £17,500 turnover, and that

after expenses AAC made a profit of £10,214 in the period 1 May to 31 July

2020.

57. The Authority notes that the figure given for income for three months from 1 May 2020

to 31 July 2020 (£17,500), would indicate that AAC is projected to earn £70,000 income

for the full financial year to 30 April 2021. This compares to income of £56,381 for the

year to 30 April 2019, and income of £53,369 for the year to 30 April 2018. However,

AAC has not provided any evidence or explanation to support the additional profit made

during the 3-month period to 31 July 2020.

58. The Authority considers that the additional profit appears high compared to that for the

two previous financial years, especially considering that AAC’s office would have been

closed for a number of weeks during that period due to Covid-19. In its email to AAC on

18 September 2020, the Authority asked AAC to confirm the approximate date its office

reopened following its closure on 7 April 2020. AAC emailed the Authority on 28

September 2020, stating that it is unable to provide any further information. Therefore,

as at the date of this Notice, the Authority remains unaware of when AAC’s offices

reopened following its closure on 7 April 2020.

59. As at the date of this Notice, AAC has failed to provide any information to substantiate

the large swing in profits for the year to 30 April 2020, as requested by the Authority on

27 July 2020. AAC also confirmed on 28 September 2020 that it is unable to provide any

further information. The Authority is therefore not satisfied that AAC meets the general

solvency requirement in CMCOB 7.2.1R.

RELEVANT STATUTORY AND HANDBOOK PROVISIONS

60. The statutory and regulatory provisions relevant to this Final Notice are referred to in

IMPACT ON THE THRESHOLD CONDITIONS

61. In light of the facts and matters set out above and for the reasons set out below, the

Authority cannot ensure that if the Application were granted AAC will satisfy, and continue

to satisfy, threshold conditions 2C (Effective supervision), 2D (Appropriate resources),

2E (Suitability) and 2F (Business model).

Threshold condition 2C: Effective supervision

62. As regards threshold condition 2C, the Authority notes that a firm must be capable of

being effectively supervised by the Authority having regard to all of the circumstances.

As COND 2.3.3(1)G provides, in assessing this threshold condition, the Authority will take

into consideration whether it is likely that the Authority will receive adequate information

from AAC to enable it to determine whether AAC is complying with the requirements and

standards under the regulatory system, and whether AAC is ready, willing and organised

to comply with Principle 11.

63. The Authority does not consider that AAC satisfies, and will continue to satisfy, the

effective supervision threshold condition in light of the concerns identified above in

paragraphs 17 to 43 and 58 to 59.

64. The Authority is concerned that AAC has failed to provide documents that are

fundamental and should be readily available within a reasonable timeframe. This

demonstrates that it is unlikely that the Authority will receive adequate information from

AAC (when requested) to enable the Authority to determine whether it is complying with

the requirements and standards under the regulatory system. The Authority is also

concerned that it has had to make repeated requests for the same documentation, over

a period of almost one year, and on several occasions AAC has failed to respond by an

agreed (and extended) deadline. The inability to provide basic information such as when

AAC’s office reopened this year is of concern to the Authority.

65. Further, AAC has provided inconsistent and incorrect information to the Authority, by way

of example accounts which contain basic arithmetic errors. In order for the Authority to

be able to effectively supervise a firm, it must be able to rely upon that firm to ensure

that the information it provides is comprehensive and accurate.

66. The Authority is concerned that although the accounts filed at Companies House indicate

that AAC does not meet the general solvency requirement, it has at no point notified the

Authority of this, either during the application process, or since it became subject to

Authority’s rules on 1 April 2019. This information is something that the Authority would

reasonably expect to be notified of by a claims management firm, given the general

solvency requirement in CMCOB 7.2.1R.

67. Finally, AAC has failed to confirm that it can record telephone calls in accordance with

the requirement in CMCOB 2.3.2R. Call recording is one of the ways in which the Authority

is able to effectively supervise firms.

68. In the circumstances, the Authority does not consider that it can ensure that AAC

satisfies, and would continue to satisfy, threshold condition 2C.

Threshold condition 2D: Appropriate resources

69. As regards threshold condition 2D, the Authority notes that a firm’s resources must be

appropriate in relation to the regulated activities conducted or proposed. As COND

2.4.2G(2) provides, ‘appropriate resources’ includes financial and non-financial resources

such as human resources, effective means by which to manage risks, and any systems,

controls, plans or policies that AAC maintains. The Authority will interpret the term

‘appropriate’ as meaning sufficient in terms of quantity, quality and availability.

70. The Authority does not consider that AAC satisfies, and will continue to satisfy, the

appropriate resources threshold condition in light of the concerns identified above in

paragraphs 17 to 59. The Authority is concerned that:

a.
It cannot rely on the latest financial information provided by AAC in considering

whether it meets the general solvency requirement in CMCOB 7.2.1R, and is

able to meet its debts as they fall due, given that the information contains

unsubstantiated profits and basic arithmetic errors, and no information has

been provided to substantiate the profits.

b.
AAC has failed to provide either adequate or any responses to a number of

requests, giving rise to the concern that it has not demonstrated that it has

adequate human resources who are sufficiently competent.

c.
The documents filed with Companies House demonstrate that AAC’s capital

and reserves are negative, and that it is not able to meet its debts as they fall

due.

71. In the circumstances, the Authority does not consider that it can ensure that AAC

satisfies, and would continue to satisfy, threshold condition 2D.

Threshold condition 2E: Suitability

72. Threshold condition 2E requires that, inter alia, a firm must be fit and proper having

regard to all of the circumstances, including the need to ensure that its affairs are

conducted in an appropriate manner, having regard in particular to the interests of

consumers and the integrity of the UK financial system.

73. The matters referred to in paragraphs 17 to 43 and 58 to 59 above also raise concerns

as to the suitability of AAC. In particular, the Authority considers that the fact that AAC

has failed to provide documentation required to assess the Application, either in a timely

manner, or to the standard required, and submitted an application containing a number

of errors, means that the Authority cannot be satisfied that:

a.
AAC is able to adequately comply with requests made by the Authority relating

to the provision of information;

b.
AAC’s business is being, or will be, managed in such a way as to ensure that

its affairs will be conducted in a sound and prudent manner;

c.
those who manage AAC’s affairs have adequate skills and experience and act

with probity; and

d.
AAC is ready, willing and organised to comply with the requirements and

standards under the regulatory system.

74. In the circumstances, the Authority does not consider that it can ensure that AAC

satisfies, and would continue to satisfy, threshold condition 2E.

Threshold condition 2F: Business model

75. Threshold condition 2F requires that a firm’s business model must be suitable in relation

to the regulated activities conducted or proposed. As COND 2.7.8G provides, a firm’s

viability and the longer-term profitability of the business are relevant to the consideration

of this threshold condition.

76. The Authority does not consider that AAC satisfies, and will continue to satisfy, the

business model threshold condition in light of the concerns identified above in paragraphs

77. The Authority is concerned that AAC has been loss-making for at least the past two

financial years and has not provided any credible plans for a return to profit.

78. In the circumstances, the Authority does not consider that it can ensure that AAC

satisfies, and would continue to satisfy, threshold condition 2F.

79. On the basis of the facts and matters described above, the Authority has concluded that

AAC will not satisfy, and continue to satisfy, the threshold conditions in relation to all of

the regulated activities for which AAC would have permission if the application was

granted.

IMPORTANT NOTICES

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

81. 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 AAC or prejudicial to the

interests of consumers or detrimental to the stability of the UK financial system.

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

Notice relates as it considers appropriate.

Authority contacts

83. For more information concerning this matter generally, contact Mike Baker, Manager,

Claims Management Companies Department at the Authority (direct line: 020 7066 1026

/ email: mike.baker@fca.org.uk).

Hilary Bourne
On behalf of the Regulatory Transactions Committee

ANNEX A – RELEVANT STATUTORY AND HANDBOOK PROVISIONS

RELEVANT STATUTORY PROVISIONS

1.
Section 55B(3) of the Act states that in giving permission, the Authority must ensure that

the person concerned will satisfy, and continue to satisfy, the threshold conditions in

relation to all of the regulated activities for which it will have permission.

2.
The threshold conditions that relate to the current application are set out in Part 1B of

schedule 6 of the Act.

RELEVANT HANDBOOK PROVISIONS

Threshold Conditions

Guidance on COND

3.
This section of the Authority’s Handbook sets out the minimum standards for becoming

and remaining authorised.

4.
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.

5.
Under COND 1.3.3AG, in determining the weight to be given to any relevant matter, the

Authority will consider its significance in relation to the regulated activities for which the

firm has, or will have, permission, in the context of its ability to supervise the firm

adequately, having regard to the Authority’s statutory objectives. In this context, a series

of matters may be significant when taken together, even though each of them in isolation

might not give serious cause for concern.

6.
COND 1.3.3BG provides that, in determining whether the firm will satisfy, and continue

to satisfy, the Authority’s threshold conditions, the Authority will have regard to all

relevant matters, whether arising in the United Kingdom or elsewhere.

7.
COND 1.3.3CG provides that, when assessing the Authority’s threshold conditions, the

Authority 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 Authority’s

threshold conditions, would be in a relevant relationship with the firm.

Threshold condition 2C: Effective supervision

8.
COND 2.3.1A(1) states that a firm must be capable of being effectively supervised by the

Authority having regard to all the circumstances including the way in which the firm’s

business is organised.

9.
COND 2.3.3G states that, when the Authority is assessing threshold condition 2C, factors

which the Authority will take into consideration include, among other things, whether it

is likely that the Authority will receive adequate information from the firm, and those

persons with whom the firm has close links, to enable it to determine whether the firm is

complying with the requirements and standards under the regulatory system for which

the Authority is responsible and to identify and assess the impact on its statutory

objectives; this will include consideration of whether the firm is ready, willing and

organised to comply with Principle 11 (Relations with regulators) and the rules in SUP on

the provision of information to the Authority.

Threshold condition 2D: Appropriate resources

10. COND 2.4.2G(2) states that the Authority 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.

11. COND 2.4.2G(3) states that high level systems and control requirements are in SYSC.

The Authority will consider whether the firm is ready, willing and organised to comply

with these and other applicable systems and controls requirements when assessing if it

has appropriate non-financial resources for the purpose of threshold condition 2D.

12. COND 2.4.2G(4) states that detailed financial resources requirements are in the relevant

section of the Prudential Standards part of the Authority’s Handbook, including specific

provisions for particular types of regulated activity. The Authority will consider whether

firms (other than firms carrying on, or seeking to carry on, PRA-regulated activities) are

ready, willing and organised to comply with these requirements when assessing if they

have appropriate financial resources for the purposes of threshold condition 2D.

13. COND 2.4.4G states that, when assessing whether a firm has appropriate resources, the

Authority will have regard to matters including (in relation to a firm other than a firm

carrying on, or seeking to carry on, a PRA-regulated activity), whether there are any

indications that the firm may have difficulties if the application is granted, at the time of

the grant or in the future, in complying with any of the Authority's prudential rules.

Threshold condition 2E: Suitability

14. COND 2.5.1A(1) states that an applicant firm must be a fit and proper person having

regard to all the circumstances, including:

(1) whether a firm has complied and is complying with requirements imposed by the

Authority in the exercise of its functions, or requests made by the Authority,

relating to the provision of information to the Authority and, where a firm has so

complied or is so complying, the manner of that compliance; and

(2) whether a firm’s business is being, or is to be, managed in such a way as to ensure

that its affairs will be conducted in a sound and prudent manner.

15. COND 2.5.3G(1) states that the emphasis of threshold condition 2E is on the suitability

of the firm itself. The suitability of each person who performs a controlled function will

be assessed by the Authority and/or the PRA, as appropriate, under the approved persons

regime (see SUP 10A (Approved persons), SUP 10C (FCA senior managers regime) and

FIT). In certain circumstances, however, the Authority may consider that the firm is not

suitable because of doubts over the individual or collective suitability of persons

connected with the firm.

16. COND 2.5.4G(2) states that examples of the kind of general considerations to which the

Authority may have regard when assessing whether a firm will satisfy, and continue to

satisfy, threshold condition 2E include, but are not limited to, whether the firm:

(1) conducts, or will conduct, its business with integrity and in compliance with proper

standards;

(2) has, or will have, a competent and prudent management; and

(3) can demonstrate that it conducts, or will conduct, its affairs with the exercise of

due skill, care and diligence.

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

Authority may have regard when assessing whether a firm will satisfy, and continue to

satisfy, this threshold condition include, but are not limited to, whether:

(1) the firm has been open and co-operative in all its dealings with the Authority and

any other regulatory body (see Principle 11 (Relations with regulators)) and is

ready, willing and organised to comply with the requirements and standards under

the regulatory system;

(2) the firm has made arrangements to put in place an adequate system of internal

control to comply with the requirements and standards for which the Authority is

responsible under the regulatory system; and

(3) the governing body of the firm is made up of individuals with an appropriate range

of skills and experience to understand, operate and manage the firm's regulated

activities.

Threshold condition 2F: Business model

18. COND 2.7.1UK states that:

(1) A’s business model (that is, A’s strategy for doing business) must be suitable for

a person carrying on the regulated activities that A carries on or seeks to carry

on; and

(2) The matters which are relevant in determining whether A satisfies the condition

in sub-paragraph (1) include:

i.
whether the business model is compatible with A’s affairs being conducted,

and continuing to be conducted, in a sound and prudent manner;

ii.
the interests of consumers; and

iii.
the integrity of the UK financial system.

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

threshold condition 2F, firms should consider matters including (but not limited to) the

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

(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.

Claims Management: Conduct of Business sourcebook

20. CMCOB 2.3.2R states that a firm that conducts regulated claims management activity

must record all telephone calls and retain all other relevant communications.

21. The general solvency requirement in CMCOB 7.2.1R states that a firm must ensure that

it is able at all times to meet its liabilities as they fall due.

Supervision SUP 15.3 General notification requirements

22. SUP 15.3.1R states that a firm must notify the Authority immediately it becomes aware,

or has information which reasonably suggests, that it has failed to satisfy one or more of

the threshold conditions, may have failed to satisfy one or more of the threshold

conditions, or may in the foreseeable future fail to satisfy one or more of the threshold

conditions.