Final Notice
On , the Financial Conduct Authority issued a Final Notice to Automotive Capital Management Limited
FINAL NOTICE
To:
Automotive Capital Management Limited
Of:
Building 46B, Wrest Park, Silsoe, Bedford, Bedfordshire MK45 4HS
FRN:
776327
Dated:
21 October 2022
ACTION
1.
For the reasons set out in this Final Notice, the Authority hereby takes the following
action against Auto Capital.
2.
The Authority issued to Auto Capital the Decision Notice which notified it that for
the reasons given below and pursuant to section 55J of the Act, the Authority had
decided to cancel Auto Capital’s Part 4A permission.
3.
Auto Capital has not referred the matter to the Tribunal within 28 days of the date
on which the Decision Notice was issued to it.
4.
Accordingly, the Authority has today cancelled Auto Capital’s Part 4A permission.
DEFINITIONS
5.
The definitions below are used in this Final Notice:
“the Act” means the Financial Services and Markets Act 2000;
2
“the appropriate resources Threshold Condition” means the threshold condition
set out in paragraph 2D of Schedule 6 to the Act;
“the Authority” means the Financial Conduct Authority;
“Auto Capital” means Automotive Capital Management Limited trading as Auto
Capital;
“Auto Capital’s Part 4A permission” means the permission granted by the Authority
to Auto Capital pursuant to Part 4A of the Act;
“CiC Notification” means a notice for changes in control under section 178 of the
Act;
“COND” means the Threshold Conditions part of the Handbook;
“the Decision Notice” means the Decision Notice issued to Auto Capital dated 9
September 2022;
“DEPP” means the Authority’s Decision Procedure and Penalties manual;
“EDM” means the Executive Decision Maker of the Authority (see further under
Procedural Matters below);
“EG” means the Authority's Enforcement Guide;
“Form A” means the application for approval to perform senior management
functions;
“the Handbook” means the Authority’s Handbook of rules and guidance;
“the Principles” means the Authority’s Principles for Business;
“the suitability Threshold Condition” means the threshold condition set out in
paragraph 2E of Schedule 6 to the Act;
“the Threshold Conditions” means the threshold conditions set out in Schedule 6 to
the Act;
“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber); and
“the Warning Notice” means the warning notice given to Auto Capital dated 12
August 2022.
FACTS AND MATTERS
6.
Auto Capital was authorised by the Authority on 25 April 2017 to conduct consumer
credit activities.
7.
On 1 December 2019, Auto Capital’s sole approved person ceased to be a controller
and had previously resigned as a director of Auto Capital, following the sale of Auto
Capital to a third party. As a result, Auto Capital’s sole approved person has ceased
to have any involvement with Auto Capital, and there are no other individuals at
Auto Capital approved to perform the senior management functions relevant to the
regulated activities that Auto Capital carries on or seeks to carry on.
8.
Auto Capital has failed to co-operate with the Authority in that it has failed to
respond adequately, or at all, to the Authority’s repeated requests that Auto Capital
completes and submits a CiC Notification and Form A, to seek approval to appoint
an appropriate individual to perform the senior management function relevant to
the regulated activities that Auto Capital carries on or seeks to carry on.
9.
No representations having been received by the Authority from Auto Capital within
the time allowed by the Warning Notice, the default procedures in DEPP 2.3.2G of
the
Authority’s
Decision
Procedure
and
Penalties
manual
permit
the
allegations/matters described in the Warning Notice, and repeated in the Decision
Notice, to be regarded as undisputed.
FAILINGS
10.
The statutory regulatory provisions relevant to this Final Notice are set out in the
Annex.
11.
From the facts and matters described above, the Authority, having regard to its
operational objectives, which include protecting and enhancing the integrity of the
UK financial system and protection of consumers, considers that:
a) by failing to respond to the Authority’s repeated requests relating to submission
of a CiC Notification and a Form A, Auto Capital is failing to comply with
Principle 11 in that Auto Capital has failed to deal with the Authority in an open
and co-operative way and to disclose to the Authority appropriately anything
relating to Auto Capital of which the Authority would reasonably expect notice.
Auto Capital is therefore not a fit and proper person having regard to all the
circumstances because it has failed to satisfy the Authority that its 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 and Auto Capital is therefore failing
to satisfy the suitability Threshold Condition; and
b) by failing to seek approval from the Authority to appoint an appropriate
individual to perform the relevant senior management function, Auto Capital’s
non-financial resources are not sufficient to enable Auto Capital to comply with
requirements imposed or likely to be imposed on it by the Authority. Therefore,
Auto Capital nonfinancial resources are not appropriate in relation to regulated
activities that it carries on or seeks to carry on and it is failing to satisfy the
appropriate resources Threshold Condition.
12.
Accordingly, having regard to the Authority’s operational objectives, the Authority
has cancelled Auto Capital’s Part 4A permission.
PROCEDURAL MATTERS
13.
This Final Notice is given to Auto Capital in accordance with section 390(1) of the
Act.
DECISION MAKER
14.
The decision which gave rise to the obligation to give this Final Notice was made
by an executive decision maker of the Authority.
Publicity
15.
The Authority must publish such information about the matter to which this Final
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 Auto Capital or prejudicial to the interest of consumers.
16.
The Authority intends to publish such information about the matter to which this
Final Notice relates as it considers appropriate.
Authority Contact
17.
For more information concerning this matter generally, please contact Tania Dratcu
at the Authority (direct line: 020 7066 6764).
Anna Couzens
Enforcement and Market Oversight Division
ANNEX
RELEVANT STATUTORY PROVISIONS
1.
The Authority’s operational objectives established in section 1B of the Act include
protecting and enhancing the integrity of the UK financial system and securing an
appropriate degree of protection for consumers.
2.
The Authority is authorised by section 55J of the Act to cancel an authorised
persons’ Part 4A permission, where it appears to the Authority that such person is
failing to satisfy the Threshold Conditions.
3.
The suitability Threshold Condition provides, in relation to a person (“A”) carrying
on or seeking to carry on regulated activities which do not consist of or include a
PRA-regulated activity, that:
“A must be a fit and proper person having regard to all the circumstances, including
–
[…]
(f) whether A’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.”
4.
The appropriate resources Threshold Condition provides, in relation to a person
(“A”) carrying on or seeking to carry on regulated activities which do not consist of
or include a PRA-regulated activity, that:
“The resources of A must be appropriate in relation to the regulated activities that
A carries on or seeks to carry on.
[…]
(4) The matters which are relevant in determining whether A has appropriate
nonfinancial resources include-
[…]
(a) whether A’s non-financial resources are sufficient to enable A to comply with –
(i) requirements imposed or likely to be imposed on A by [the Authority] in the
course of the exercise of its functions […]”.
RELEVANT HANDBOOK PROVISIONS
5.
In exercising its powers to cancel a firm’s Part 4A permission, the Authority must
have regard to guidance published in the Handbook and in regulatory guides, such
as EG. The relevant main considerations in relation to the action specified above
are set out below.
Relevant Principle
6
6.
Principle 11 requires a firm to deal with its regulators in an open and co-operative
way, and to disclose to the Authority appropriately anything relating to the firm of
which the Authority would reasonably expect notice
Guidance concerning the Threshold Conditions
7.
Guidance on the relevant Threshold Condition is set out in COND.
COND 2.4 – Appropriate resources: Paragraph 2D of Schedule 6 to the Act
8.
COND 2.4.1AUK reproduces the relevant statutory provision that the resources of
a person concerned must be appropriate in relation to the regulated activities that
A carries on or seeks to carry on, and that the matters which are relevant in
determining whether A has appropriate non-financial resources include whether A’s
non-financial resources are sufficient to enable A to comply with the requirements
imposed or likely to be imposed on A by the Authority in the course of the exercise
of its functions.
COND 2.5 – Suitability: Paragraph 2E of Schedule 6 to the Act
9.
COND 2.5.1AUK reproduces the relevant statutory provision that a person
concerned must be a fit and proper person having regard to all the circumstances,
including, amongst other things, the need to ensure that its 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 and whether those who manage A’s affairs have
adequate skills and experience and act with probity.
10.
COND 2.5.1BG confirms that paragraph 2E of Schedule 6 to the Act sets out the
suitability Threshold Condition for firms carrying on, or seeking to carry on,
regulated activities which do not consist of or include a PRA-regulated activity.
11.
COND 2.5.2G states that the Authority will take into consideration anything that
could influence a firm’s continuing ability to satisfy the suitability Threshold
Condition.
12.
COND 2.5.6G gives 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, the suitability Threshold Condition including, but not limited to, whether:
•
the firm has been open and co-operative in all its dealings with the Authority and
is ready, willing and organised to comply with the requirements and standards
under the regulatory system (COND 2.5.6G(1)); or
•
the firm has contravened, amongst other things, any provisions of the regulatory
system, which includes the Principles and other rules (COND 2.5.6G(4)).
OTHER RELEVANT REGULATORY PROVISIONS
13.
The Authority’s policy in relation to its enforcement powers is set out in EG, certain
provisions of which are summarised below.
Cancelling a firm’s Part 4A permissions on the Authority’s own initiative
14.
EG 8.1.1(1) provides that the Authority may use its own initiative power to vary or
cancel the permission of an authorised person under section 55J of the Act, where
the person is failing or is likely to fail to satisfy the Threshold Condition for which
the Authority is responsible.
15.
EG 8.5.1(1) states that the Authority will consider cancelling a firm’s Part 4A
permission using its own initiative power contained in section 55J of the Act in
circumstances where the Authority has very serious concerns about the firm, or the
way its business is or has been conducted.
16.
EG 8.5.2 provides examples of the types of circumstances in which the Authority
may cancel a firm’s Part 4A permission. These include failure to provide the
Authority with valid contact details or failure to maintain the details provided, such
that the Authority is unable to communicate with the firm (EG 8.5.2(6)), and
repeated failures to comply with rules and requirements (EG 8.5.2(7)).
To:
Automotive Capital Management Limited
Of:
Building 46B, Wrest Park, Silsoe, Bedford, Bedfordshire MK45 4HS
FRN:
776327
Dated:
21 October 2022
ACTION
1.
For the reasons set out in this Final Notice, the Authority hereby takes the following
action against Auto Capital.
2.
The Authority issued to Auto Capital the Decision Notice which notified it that for
the reasons given below and pursuant to section 55J of the Act, the Authority had
decided to cancel Auto Capital’s Part 4A permission.
3.
Auto Capital has not referred the matter to the Tribunal within 28 days of the date
on which the Decision Notice was issued to it.
4.
Accordingly, the Authority has today cancelled Auto Capital’s Part 4A permission.
DEFINITIONS
5.
The definitions below are used in this Final Notice:
“the Act” means the Financial Services and Markets Act 2000;
2
“the appropriate resources Threshold Condition” means the threshold condition
set out in paragraph 2D of Schedule 6 to the Act;
“the Authority” means the Financial Conduct Authority;
“Auto Capital” means Automotive Capital Management Limited trading as Auto
Capital;
“Auto Capital’s Part 4A permission” means the permission granted by the Authority
to Auto Capital pursuant to Part 4A of the Act;
“CiC Notification” means a notice for changes in control under section 178 of the
Act;
“COND” means the Threshold Conditions part of the Handbook;
“the Decision Notice” means the Decision Notice issued to Auto Capital dated 9
September 2022;
“DEPP” means the Authority’s Decision Procedure and Penalties manual;
“EDM” means the Executive Decision Maker of the Authority (see further under
Procedural Matters below);
“EG” means the Authority's Enforcement Guide;
“Form A” means the application for approval to perform senior management
functions;
“the Handbook” means the Authority’s Handbook of rules and guidance;
“the Principles” means the Authority’s Principles for Business;
“the suitability Threshold Condition” means the threshold condition set out in
paragraph 2E of Schedule 6 to the Act;
“the Threshold Conditions” means the threshold conditions set out in Schedule 6 to
the Act;
“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber); and
“the Warning Notice” means the warning notice given to Auto Capital dated 12
August 2022.
FACTS AND MATTERS
6.
Auto Capital was authorised by the Authority on 25 April 2017 to conduct consumer
credit activities.
7.
On 1 December 2019, Auto Capital’s sole approved person ceased to be a controller
and had previously resigned as a director of Auto Capital, following the sale of Auto
Capital to a third party. As a result, Auto Capital’s sole approved person has ceased
to have any involvement with Auto Capital, and there are no other individuals at
Auto Capital approved to perform the senior management functions relevant to the
regulated activities that Auto Capital carries on or seeks to carry on.
8.
Auto Capital has failed to co-operate with the Authority in that it has failed to
respond adequately, or at all, to the Authority’s repeated requests that Auto Capital
completes and submits a CiC Notification and Form A, to seek approval to appoint
an appropriate individual to perform the senior management function relevant to
the regulated activities that Auto Capital carries on or seeks to carry on.
9.
No representations having been received by the Authority from Auto Capital within
the time allowed by the Warning Notice, the default procedures in DEPP 2.3.2G of
the
Authority’s
Decision
Procedure
and
Penalties
manual
permit
the
allegations/matters described in the Warning Notice, and repeated in the Decision
Notice, to be regarded as undisputed.
FAILINGS
10.
The statutory regulatory provisions relevant to this Final Notice are set out in the
Annex.
11.
From the facts and matters described above, the Authority, having regard to its
operational objectives, which include protecting and enhancing the integrity of the
UK financial system and protection of consumers, considers that:
a) by failing to respond to the Authority’s repeated requests relating to submission
of a CiC Notification and a Form A, Auto Capital is failing to comply with
Principle 11 in that Auto Capital has failed to deal with the Authority in an open
and co-operative way and to disclose to the Authority appropriately anything
relating to Auto Capital of which the Authority would reasonably expect notice.
Auto Capital is therefore not a fit and proper person having regard to all the
circumstances because it has failed to satisfy the Authority that its 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 and Auto Capital is therefore failing
to satisfy the suitability Threshold Condition; and
b) by failing to seek approval from the Authority to appoint an appropriate
individual to perform the relevant senior management function, Auto Capital’s
non-financial resources are not sufficient to enable Auto Capital to comply with
requirements imposed or likely to be imposed on it by the Authority. Therefore,
Auto Capital nonfinancial resources are not appropriate in relation to regulated
activities that it carries on or seeks to carry on and it is failing to satisfy the
appropriate resources Threshold Condition.
12.
Accordingly, having regard to the Authority’s operational objectives, the Authority
has cancelled Auto Capital’s Part 4A permission.
PROCEDURAL MATTERS
13.
This Final Notice is given to Auto Capital in accordance with section 390(1) of the
Act.
DECISION MAKER
14.
The decision which gave rise to the obligation to give this Final Notice was made
by an executive decision maker of the Authority.
Publicity
15.
The Authority must publish such information about the matter to which this Final
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 Auto Capital or prejudicial to the interest of consumers.
16.
The Authority intends to publish such information about the matter to which this
Final Notice relates as it considers appropriate.
Authority Contact
17.
For more information concerning this matter generally, please contact Tania Dratcu
at the Authority (direct line: 020 7066 6764).
Anna Couzens
Enforcement and Market Oversight Division
ANNEX
RELEVANT STATUTORY PROVISIONS
1.
The Authority’s operational objectives established in section 1B of the Act include
protecting and enhancing the integrity of the UK financial system and securing an
appropriate degree of protection for consumers.
2.
The Authority is authorised by section 55J of the Act to cancel an authorised
persons’ Part 4A permission, where it appears to the Authority that such person is
failing to satisfy the Threshold Conditions.
3.
The suitability Threshold Condition provides, in relation to a person (“A”) carrying
on or seeking to carry on regulated activities which do not consist of or include a
PRA-regulated activity, that:
“A must be a fit and proper person having regard to all the circumstances, including
–
[…]
(f) whether A’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.”
4.
The appropriate resources Threshold Condition provides, in relation to a person
(“A”) carrying on or seeking to carry on regulated activities which do not consist of
or include a PRA-regulated activity, that:
“The resources of A must be appropriate in relation to the regulated activities that
A carries on or seeks to carry on.
[…]
(4) The matters which are relevant in determining whether A has appropriate
nonfinancial resources include-
[…]
(a) whether A’s non-financial resources are sufficient to enable A to comply with –
(i) requirements imposed or likely to be imposed on A by [the Authority] in the
course of the exercise of its functions […]”.
RELEVANT HANDBOOK PROVISIONS
5.
In exercising its powers to cancel a firm’s Part 4A permission, the Authority must
have regard to guidance published in the Handbook and in regulatory guides, such
as EG. The relevant main considerations in relation to the action specified above
are set out below.
Relevant Principle
6
6.
Principle 11 requires a firm to deal with its regulators in an open and co-operative
way, and to disclose to the Authority appropriately anything relating to the firm of
which the Authority would reasonably expect notice
Guidance concerning the Threshold Conditions
7.
Guidance on the relevant Threshold Condition is set out in COND.
COND 2.4 – Appropriate resources: Paragraph 2D of Schedule 6 to the Act
8.
COND 2.4.1AUK reproduces the relevant statutory provision that the resources of
a person concerned must be appropriate in relation to the regulated activities that
A carries on or seeks to carry on, and that the matters which are relevant in
determining whether A has appropriate non-financial resources include whether A’s
non-financial resources are sufficient to enable A to comply with the requirements
imposed or likely to be imposed on A by the Authority in the course of the exercise
of its functions.
COND 2.5 – Suitability: Paragraph 2E of Schedule 6 to the Act
9.
COND 2.5.1AUK reproduces the relevant statutory provision that a person
concerned must be a fit and proper person having regard to all the circumstances,
including, amongst other things, the need to ensure that its 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 and whether those who manage A’s affairs have
adequate skills and experience and act with probity.
10.
COND 2.5.1BG confirms that paragraph 2E of Schedule 6 to the Act sets out the
suitability Threshold Condition for firms carrying on, or seeking to carry on,
regulated activities which do not consist of or include a PRA-regulated activity.
11.
COND 2.5.2G states that the Authority will take into consideration anything that
could influence a firm’s continuing ability to satisfy the suitability Threshold
Condition.
12.
COND 2.5.6G gives 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, the suitability Threshold Condition including, but not limited to, whether:
•
the firm has been open and co-operative in all its dealings with the Authority and
is ready, willing and organised to comply with the requirements and standards
under the regulatory system (COND 2.5.6G(1)); or
•
the firm has contravened, amongst other things, any provisions of the regulatory
system, which includes the Principles and other rules (COND 2.5.6G(4)).
OTHER RELEVANT REGULATORY PROVISIONS
13.
The Authority’s policy in relation to its enforcement powers is set out in EG, certain
provisions of which are summarised below.
Cancelling a firm’s Part 4A permissions on the Authority’s own initiative
14.
EG 8.1.1(1) provides that the Authority may use its own initiative power to vary or
cancel the permission of an authorised person under section 55J of the Act, where
the person is failing or is likely to fail to satisfy the Threshold Condition for which
the Authority is responsible.
15.
EG 8.5.1(1) states that the Authority will consider cancelling a firm’s Part 4A
permission using its own initiative power contained in section 55J of the Act in
circumstances where the Authority has very serious concerns about the firm, or the
way its business is or has been conducted.
16.
EG 8.5.2 provides examples of the types of circumstances in which the Authority
may cancel a firm’s Part 4A permission. These include failure to provide the
Authority with valid contact details or failure to maintain the details provided, such
that the Authority is unable to communicate with the firm (EG 8.5.2(6)), and
repeated failures to comply with rules and requirements (EG 8.5.2(7)).