FIRST SUPERVISORY NOTICE

To:

AMI Professional Services Limited

Of:
Heybridge Business Centre

110 The Causeway

Heybridge

Maldon

Essex

CM9 4ND




Firm
Reference


Number:

562657

ACTION

1. For the reasons given below and pursuant to section 55J of the Act, the Authority
has decided to vary the permission granted to AMI Professional Services Limited
(“AMI”) pursuant to Part 4A of the Act, by removing all of its regulated activities
with immediate effect. Accordingly, AMI’s Part 4A permission no longer includes
the regulated activities of:

(a)
advising on investments (except on Pension Transfers and Pension Opt
Outs);

(b)
agreeing to carry on a regulated activity;

(c)
arranging (bringing about) deals in investments;

(d)
assisting in the administration and performance of a contract of insurance;

(e)
dealing in investments as agent; and

(f)
making arrangements with a view to transactions in investments.

2.
The Authority has further decided to impose the following requirements, pursuant
to section 55L of the Act, namely that AMI must, within 14 days from the date on
which this First Supervisory Notice is given:

(a)
notify in writing all clients for AMI’s regulated activities that it is no longer
permitted by the Authority to carry on regulated activities; and

(b)
provide the Authority with a copy of the written notification sent to all clients
for its regulated activities pursuant to (a) above, together with a list of all
clients to whom such notification has been sent.

REASONS FOR ACTION

3.
The Authority has concluded, on the facts and matters described below, that AMI is
failing to satisfy the Threshold Conditions. In the opinion of the Authority, AMI’s
financial resources are not appropriate in relation to the regulated activities it
carries on, or seeks to carry on. Specifically, AMI has failed to maintain PII. AMI is
therefore failing to satisfy the appropriate resources Threshold Condition and in
breach of Principle 4 (Financial prudence) of the Authority’s Principles for
Businesses (“the Principles”).

DEFINITIONS

4.
The definitions below are also used in this First Supervisory Notice (and in the
Annex):

“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;


“AMI’s Part 4A permission” means AMI’s permission pursuant to Part 4A of the
Act;

“PII” means Professional Indemnity Insurance;


“the Threshold Conditions” means the threshold conditions set out in Part 1B of
Schedule 6 to the Act; and

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

FACTS AND MATTERS RELIED ON

5.
AMI was authorised by the Authority on 2 April 2012 to conduct insurance
mediation.

6.
The Authority has concluded that AMI has not maintained PII (as AMI has failed to
satisfy the Authority that it has maintained PII, despite having had reasonable
opportunity to do so).

FAILINGS

7.
The regulatory provisions relevant to this First Supervisory Notice are set out in
the Annex.

8.
From the facts and matters described above the Authority, having regard to its
operational objectives, has reached the following conclusions:

•
by failing to maintain compliant PII, AMI is failing to make appropriate
provision in respect of its liabilities, including contingent and future liabilities.
AMI is therefore failing to satisfy the appropriate resources threshold condition
in paragraph 2D of Schedule 6 to the Act;

•
AMI is in breach of Principle 4 (Financial prudence) of the Principles, which
states that a firm must maintain adequate financial resources;

•
the risk of loss or other adverse effect on consumers by AMI’s failings, which
are material breaches of regulatory requirements which apply to it, causes the
Authority to have very serious concerns about AMI such that the exercise of
the Authority’s own-initiative powers to vary AMI’s Part 4A permission, and to
impose on AMI the requirements set out above, with immediate effect are
appropriate responses to those concerns; and

•
it is necessary to exercise the Authority’s own-initiative powers to vary AMI’s
Part 4A permission, and to impose the requirements on AMI set out above,
with immediate effect, having regard to AMI’s failure to satisfy the appropriate
resources threshold condition; and

•
specifically, the variation of AMI’s Part 4A permission, and the imposition on
AMI of the requirements set out above, should take immediate effect to
address the Authority’s serious concern that claims for which AMI is uninsured
might arise.

PROCEDURAL MATTERS

9.
This First Supervisory Notice is given to AMI under section 55Y(4) and in
accordance with section 55Y(5) of the Act.

Decision Maker

10.
The decision which gave rise to the obligation to give this First Supervisory Notice
was made by a Deputy Chairman of the Regulatory Decisions Committee.

The Tribunal

11.
IFS has the right to refer the matter to which this First Supervisory Notice relates
to the Tribunal. The Tax and Chancery Chamber is the part of the Tribunal which,
amongst other things, hears references arising from decisions of the Authority.
Under paragraph 2(2) of Schedule 3 of the Tribunal Procedure (Upper Tribunal)
Rules 2008, IFS has 28 days from the date on which this First Supervisory Notice
is given to IFS to refer the matter to the Tribunal.

12.
A reference to the Tribunal can be made by way of a reference notice (Form FTC3)
signed by IFS and filed with a copy of this First Supervisory Notice. The Tribunal’s

contact details are: The Upper Tribunal, Tax and Chancery Chamber, 45 Bedford
Square,
London
WC1B
3DN
(telephone:
020
7612
9700;
email:
FS@tribunals.gsi.gov.uk).

13.
For further information on the Upper Tribunal (including the power to vary time
periods) you should refer to the HM Courts and Tribunal Service website which
will provide guidance and the relevant form to complete. The relevant page on
HM Courts and Tribunal Service website can be accessed via the following link:

14.
IFS should note that a copy of the reference notice (Form FTC3) must also be sent
to the Authority at the same time as filing a reference with the Tribunal. A copy of
the reference notice should be sent to Adam Doe at the Financial Conduct
Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

Representations

15.
AMI has the right to make written and oral representations to the Authority
(whether or not it refers this matter to the Tribunal). The deadline for providing
written representations to the Authority and also to notify the Authority that it
wishes to make oral representations is 21 August 2014, or such later date as may
be permitted by the Authority. Written representations should be made to the
Regulatory Decisions Committee and sent to:

Nathaniel Barber

RDC Secretariat

Financial Conduct Authority

25 The North Colonnade

Canary Wharf

London

E14 5HS

16.
AMI should note that section 391 of the Act requires the Authority when the First
Supervisory Notice takes effect (and this First Supervisory Notice takes immediate
effect), to publish such information about the matter as it considers appropriate.

Contacts

17.
For more information concerning this matter generally, AMI should contact Adam
Doe at the Authority (direct line: 020 7066 5522/ Email: adam.doe@fca.org.uk).

18.
If AMI has any questions regarding the procedures of the Regulatory Decisions
Committee, it should contact Nathaniel Barber (direct line: 020 7066 7406/ Email:
nathaniel.barber@fca.org.uk) or Jackie Noonan (direct line: 0207 066 3074/ Email:
jackie.noonan@fca.org.uk).

Peter Hinchliffe
Deputy Chairman, Regulatory Decisions Committee

ANNEX

RELEVANT STATUTORY PROVISIONS

1.
Section 1A(1) of the Act states that the body corporate previously known as the
Financial Services Authority is renamed the Financial Conduct Authority.

2.
The Authority’s operational objectives established in section 1B of the Act include
the protection of consumers.

3.
The Authority is authorised by section 55J of the Act to exercise the following
powers:

•
to vary an authorised person’s permission where it appears to the
Authority that such person is failing to satisfy the threshold conditions
(section 55J(1)(a));

•
to vary an authorised person’s permission where it appears to the
Authority that it is desirable to do so to advance any of its operational
objectives (section 55J(1)(c)(i));

•
to vary such a permission by removing a regulated activity from those for
which the permission is given (section 55J(2)(a)(ii)); and

•
to include any provision in the permission as varied that could be included
if a fresh permission were being given in response to an application under
section 55A of the Act (section 55J(10)).

4.
The Authority is authorised by section 55L of the Act to impose a new
requirement on an authorised person with a Part 4 permission if it appears to the
Authority that such person is failing to satisfy the Threshold Conditions (section
55L(2)(a)) or it is desirable to do so to advance one or more of the Authority’s
operational objectives (section 55L(2)(c)).

5.
Section 55N of the Act provides that a requirement may be imposed so as to
require the person concerned to take specified action or so as to require the
person concerned to refrain from taking specified action.

6.
Section 55Y of the Act allows such a variation or requirement to take effect
immediately (or on a specified date) only if the Authority having regard to the
ground on which it is exercising its own-initiative power, reasonably considers
that it is necessary for the variation to take effect immediately (or on that date).

7.
Section 391 of the Act provides that:

(5) When a supervisory notice takes effect, the [Authority] must
publish such information about the matter to which the notice
relates as it considers appropriate.

(6) The [Authority] may not publish information under this section if,
in its opinion, publication of the information would be-

(a) unfair to the person with respect to whom the action was to be
taken […], [or]

(b) prejudicial to the interests of consumers

(7) Information is to be published under this section in such manner as
the [Authority] considers appropriate.”

8.
Paragraph 2D of Part 1B of Schedule 6 to the Act sets out the appropriate
resources Threshold Condition which provides that:

“(1) The resources of A must be appropriate in relation to the
regulated activities that A carries on or seeks to carry on.”

RELEVANT HANDBOOK PROVISIONS

9.
In exercising its power to vary a Part 4A permission, the Authority must have
regard to guidance published in the Authority’s Handbook of Rules and Guidance
(“the Handbook”). The relevant main considerations in relation to the action
specified above are set out below.

Relevant Rule

10.
Rule MIPRU 3.2.1R in the Prudential sourcebook for Mortgage and Home Finance
Firms, and Insurance Intermediaries (“MIPRU”) states:

“A firm must take out and maintain professional indemnity insurance that is at
least equal to the requirements in this section from:

(1)
an
insurance
undertaking
which
is
authorised
to
transact
professional indemnity insurance in the EEA; or

(2)
a person of equivalent status in:

(a)
a Zone A country;

(b)
the Channel Islands, Gibraltar, Bermuda or the Isle of Man.”

Relevant Principle

11.
Principle 4 (Financial prudence) of the Principles, states that a firm must maintain
adequate financial resources.

Guidance concerning the relevant Threshold Condition

12.
Guidance on the Threshold Conditions is set out in the part of the Handbook
entitled Threshold Conditions (“COND”).



COND 2.4 Appropriate resources (paragraph 2D of Part 1B of Schedule 6 to the Act)

13.
COND 2.4.1AUK, states that the resources of A must be appropriate in relation to
the regulated activities that A carries on or seeks to carry on.

14.
COND 2.4.1BG provides that paragraph 2D of Schedule 6 to the Act sets out the
appropriate resources threshold condition for firms carrying on, or seeking to
carry on regulated activities, which do not include a PRA regulated activity.

15.
COND 2.4.4G(2) provides that the relevant matters to which the Authority may
have regard when assessing whether a firm will satisfy, and continue to satisfy,
the appropriate resources threshold condition may include whether the firm is
likely to have difficulties in complying with any of the Authority’s prudential rules
(COND 2.4.4G(2)(a)).

OTHER RELEVANT REGULATORY PROVISIONS

16.
The Authority's policy in relation to its enforcement powers is set out in the
Enforcement Guide (EG), certain provisions of which are summarised below.

17.
EG 8.1(1) reflects the provisions of sections 55J and 55L of the Act that the
Authority may use its own-initiative power to vary or cancel the permission of an
authorised firm and impose requirements where a firm is failing or is likely to fail
to satisfy the threshold conditions.

Varying a firm’s Part 4A permission on the Authority’s own-initiative

18.
EG 8.1B provides that the Authority will have regard to its statutory objectives and
the range of regulatory tools that are available to it, when it considers how it
should deal with a concern about a firm.

19.
EG 8.3 provides that the Authority will exercise its formal powers under section 55J
or 55L of the Act, where the Authority considers it is appropriate to ensure a firm
meets its regulatory requirements. EG 8.3(1) specifies that the Authority may
consider it appropriate to exercise its powers where it has serious concerns about a
firm or the way its business is being or has been conducted.

20.
EG 8.5(1)(a) specifies that the Authority will consider exercising its own-initiative
power under section 55J(1)(a) or 55L(2)(a) of the Act, where the firm appears to
be failing, or appears likely to fail, to satisfy the threshold conditions relating to
one or more, or all, of its regulated activities. EG 8.5(1)(a) states that one
circumstance is where a firm’s resources are inappropriate as it has failed to
manage risk with PII.

Use of the own-initiative powers in urgent cases

21.
EG 8.6 states that the Authority may impose a variation of permission so that it
takes effect immediately or on a specified date if it reasonably considers it
necessary for the variation to take effect immediately (or on the date specified),
having regard to the ground on which it is exercising its own-initiative powers.

22.
EG 8.7 provides the circumstances in which the Authority will consider exercising
its own initiative power as a matter of urgency, include where the information

available to it indicates serious concerns about the firm or its business that need to
be addressed immediately (EG 8.7(1)).

23.
EG 8.8 provides an example of situations which will give rise to such serious
concerns. Specifically, EG 8.8(4) includes where circumstances suggest a serious
problem within a firm that call into question the firm’s ability to continue to meet
the threshold conditions.

24.
EG 8.9 sets out the factors which will determine whether the urgent exercise of the
Authority’s own-initiative power is appropriate, including the extent of any risk of
consumer loss or other adverse effect on consumers (EG 8.9(1)).