FIRST SUPERVISORY NOTICE

Address:
Kuhlmann House
Lancaster Way
Fradley Park
Lichfield
Staffordshire
WS18 8SX.

ACTION

1.
For the reasons given in this notice, and pursuant to section 55L of the Act, the
Authority has decided to impose a requirement that the Firm:

a. Corresponds with its customers, within 14 days of the date of this Notice,

providing the following information to each customer:

i. written statements of account clearly indicating the balance owed,

at the time of the statement, to each of their creditors; the
cumulative total of monies paid to creditors whilst a customer of
the Firm; the amount of money accumulated by the customer and
held on trust by the Firm and the cumulative total of the fees paid
by the customer to the Firm; and

ii. if and when the Firm no longer provides the debt plan, as defined in

paragraph 6, how monies accumulated by the Firm will be refunded
to the customers as at the date of the written statements of
account.

b. Provides the following information to the Authority:

i. a list of the customers of the Firm, detailing each customers’

correspondence address, all contact numbers and email addresses;

ii. the identity (with solicitor’s reference where known) of all Law

Firms or third parties to which the Firm’s customers have been
transferred since 1 April 2014 or to which the Firm intends to
transfer, or otherwise introduce, customers to in the future; and

iii. the number of customers who have been transferred to a debt

management plan by the Firm or a Connected Firm since 1 April
2014.

REASONS FOR ACTION

2.
In the relevant period, the Firm entered into, or administered, 359 debt plans with
customers. Customers paid a monthly fee to the Firm of 90% of their monthly
payment or at an hourly rate of £75 per hour, whichever was the lower. In practice
the customers would pay 90% of their monthly payment to the Firm in almost all
cases.

3.
The Firm has indicated in correspondence with the Authority that they intend to
transfer, or otherwise introduce, the customers to Law Firms and/or to the Firm’s
debt management product.

4.
The Authority and the Firm have been engaged in Written Requirement
correspondence since 30 October 2014, the Authority requiring the Firm to inform it
of the Firm’s intentions towards transfer of the customers and to provide key
information to enable the customers to make an informed decision as to whether or
not to accept this proposed transfer. This has been necessary in order for the
Authority to be in a position to adequately supervise the Firm and seek to ensure
customers are being treated fairly. The Written Requirements have not been
complied with satisfactorily.

5.
The Authority considers that it is desirable to exercise the power in order to
advance one of its operational objectives, namely, the consumer protection
objective.

DEFINITIONS

6.
The definitions below are used in this Warning Notice.

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

“the Authority” means the Financial Conduct Authority;

“the CCA” means the Consumer Credit Act 1974;

“a Connected Firm” means each of Haydon Associates Debt Management
Consultants Limited and Sterling Financial Security Limited;

“CONC” means the Consumer Credit sourcebook of the Authority’s Handbook;

“the customers” means the 359 customers who held debt plans with Clear View
during the relevant period;

“the debt plan” means a debt reduction plan set up by Clear View before or during
the relevant period;

“the Firm” means Clear View Finance Limited;

“full and final settlement” means a model in which the firm holds money on behalf
of the customer and does not distribute that money promptly, pending negotiating
a settlement with the customer’s lenders;

“Law Firms” means the unidentified firms of solicitors accepting as clients the
customers transferred to them from the Firm or a Connected Firm;

“the OFT” means the Office of Fair Trading;

“the RAO” means the Financial Services and Markets Act 2000 (Regulated
Activities) Order 2001;

“the relevant period” means 1 April 2014 to the date of this notice;

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

“the First Visit” means the attendance at the offices of the Firm by the Authority on
18 June 2014;

“the Second Visit” means the attendance at the offices of the Firm by the Authority
on 11 November 2014;

“the VREQ” means the voluntary requirement agreed to by the Firm, on 4 July
2014, adding a limitation to the Firm’s interim permission to the effect that it must
not enter into contractual arrangements with new customers for debt counselling or
debt adjusting purposes;

“Written Requirements” means a written requirement, seeking information and/or
documentation, imposed on the Firms pursuant to section 165 of the Act;

“Written Statements” means a written statement of a customer’s account providing
the following information: the balance owed, at the time of the statement, to each
creditor; the cumulative total of monies paid to creditors; the amount of money
accumulated by the customer and held on trust by the Firm; the cumulative total of
the fees paid by the customer to the Firm up to the date of the written statement
and how monies accumulated by the Firm will be refunded to customers; and

“the 2013 Order” means the Financial Services and Markets Act (Regulated
Activities) (Amendment) (No. 2) Order 2013.

FACTS AND MATTERS

Background

7.
On 7 January 2010, the OFT issued a licence to the Firm under the CCA. The Firm
obtained an interim permission on 1 April 2014 to carry on the regulated activities
of debt counselling and debt adjusting. The interim permission arose in accordance
with article 56 of the 2013 Order and is to be treated as a permission under Part 4A
of the Act.

8.
Anthony Roberts is the 100% shareholder and sole director of the Firm. The Firm
conducts both debt management activities and debt “reduction” activities and has

at least 519 clients (160 with debt management plans and 359 with debt plans).
Two distinct debt products were offered by the Firm:

a. A standard debt management plan – where the Firm intends to assess a

client’s ability to make repayments across the range of creditors, and will
include debt advice and counselling and manages the collection and
distribution of payments to them; and

b. A debt “reduction” plan (i.e. a debt plan as defined in paragraph 6 above)

– which offered the standard debt management plan, plus a range of
additional services, including seeking to assess the legitimacy of a client’s
debt, and challenge these where any legal, or other, relevant process
failings have been identified, with the potential outcome being a
renegotiation and potential reduction (or write off) in the debt outstanding.

9.
For the debt plan, the Firm would firstly advise the customer on their debts and
then correspond with the customer’s creditors to seek information about the
customer’s loans with creditors to determine whether the enforceability could be
challenged under the CCA. The Firm would also write to a number of banks to see
whether the customer was able to claim compensation for payment protection
insurance being mis-sold to that customer and whether the banks had imposed
unfair charges. The Firm would seek to negotiate adjusted balances for clients
irrespective of the merits of any claim to unenforceability or for payment protection
insurance or unfair charges redress. The terms and conditions of the contract
between the customers and the Firm required the Firm to advise on whether
compromises appeared to be fair and reasonable and to provide a report, in
writing, about the best available terms for repayment of debt and make a
recommendation.

10.
The terms and conditions of the contract between the customers and the Firm
stated that the Firm would charge fees, costs, charges and expenses for the debt
plan, taken from the monthly payment made by the customer, at an hourly rate of
£75 per hour up to a maximum of 90% of the aggregate of the monthly payments.
The customers would then be subject to this arrangement for an indefinite period of
time.

11.
At the Second Visit, the Firm accepted that it invariably charges all its customers
90% of the monthly payment. The Firm has agreed with the Authority that its
business model is not one that can be properly described as a “full and final
settlement” model.

12.
Shortly after the First Visit, the Authority issued a draft requirement notice, on 22
July 2014, in accordance with section 166 of the Act requiring a report by a skilled
person to be prepared. Following discussions with the Authority following the Visit,
the Firm applied for a VREQ which was accepted by the Authority and took effect on
4 July 2014. The Firm has continued to carry out their services for their customers
after the imposition of the VREQ as the VREQ did not prevent this continued work
and fees for their services.

13.
The Firm subsequently stated to the Authority that they intended to transfer its
customers to Law Firms where their debt reduction work would continue. The
Authority was, and remains, concerned whether the Law Firms, in undertaking this
work, would be acting within the exemption from the general prohibition pursuant
to section 327 of the Act or where the Law Firm in question is an authorised
person, they are acting within their permissions. . The Authority requires the

names, and full contact details, of the Law Firms to enable it to continue to
scrutinise the work being carried out by the Law Firms and determine whether the
Law Firms are being compliant with their regulatory obligations.

14.
The Authority seeks information about the customers of the Firm to ensure that the
Authority is able to contact them if it feels it is appropriate to do so of the purpose
of advancing the consumer protection objective. The information required is limited
to a list of the customers with the Firm detailing the customers’ correspondence
address, all contact numbers and email addresses. The Authority has asked other
debt management firms to provide them with similar information. The Firm has
refused to provide this information.

15.
It is vital for a customer to have the appropriate information available in order for
them to make an informed decision whether or not to agree to a proposed transfer
of their debt reduction product with the Firm to a different debt management
product with the Firm, or a Connected Firm, or a similar debt reduction product
with an unconnected firm, or a Law Firm.

16.
The Authority understands that the Firm has transferred customers of the debt
reduction product to a debt management plan (as referred to in paragraph 8a) with
it or a Connected Firm. The Authority seeks the number of customers that the Firm
has transferred in this way in order for it to be able to continue to supervise the
Firm, or Connected Firm, appropriately.

17.
This information and documentation sought by the Authority from the Firm has not
been provided to the Authority after a number of Written Requirements. As set out
above, these are reasonably required in connection with the exercise by the
Authority of functions conferred on it by the Act.

18.
The Authority considers that much of the activities (but not all) that the Firm
carries out in practice should be construed as debt adjusting and/or debt
counselling under article 39D and article 39E of the RAO:

a. Debt adjusting includes the activity of negotiating with a lender, on behalf

of a borrower, terms for the discharge of a debt due under a credit
agreement, and any similar activity concerned with the liquidation of a
debt; and

b. Debt counselling includes advice to a borrower about the liquidation of a

debt due under a credit agreement.

19.
Accordingly, much of the Firm’s activities (but not all) should be considered to be
“specified activities”, under the RAO, and the Firm is required (as it is doing this by
way of business without any obvious exemptions applying) to comply with the rules
in CONC and to comply with Written Requirements. In addition, to be able to
discharge its general functions, the Authority must be able to seek information
and/or documentation in order to consider whether a firm is conducting business
requiring it to be authorised.

20.
Activities the Firm engages in that are not considered to be “specified activities”
under the RAO may be regulated claims management services under the
Compensation Act 2006.

21.
The Firm is not authorised by the Claims Management Regulator under the
Compensation Act 2006 in respect of regulated claims management services.

Failings

22.
The regulatory provisions relevant to this First Supervisory Notice are set out in
Annex A.

23.
From the facts and matters described above, the Authority, having regard to its
operational objectives, has concluded that the Firm has failed to comply with the
Written Requirements that were imposed reasonably by the Authority.

24.
The Authority requires this information and/or documentation, and the Firm to
provide its customers with Written Statements in order to advance its consumer
protection objective.

PROCEDURAL MATTERS

Decision maker

25.
The decision which gave rise to the obligation to give this First Supervisory Notice
was made by the Regulatory Transactions Committee.

26.
This First Supervisory Notice is given under section 55Y(4) and in accordance with
section 55Y(5) of the Act and is being served on the Firm at its place of business as
last notified to the Authority. The following statutory rights are important.

Representations

27.
The person to whom this First Supervisory Notice is given has the right to make
written and oral representations to the Authority (whether or not it refers this
matter to the Tribunal). It must do by 6 April 2015 or such later date as may be
permitted by the Authority. Written representations should be made to the
Regulatory Transactions Committee and sent to:

Mrs Kate Rowley
Secretary to the Regulatory Transactions Committee
Financial Conduct Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS

28.
The Authority must be informed in writing of any intention to make oral
representations by 30 March 2015. If the Authority is not notified by this date, the
person to whom this Notice is given will not, other than in exceptional
circumstances, be able to make oral representations.

The Tribunal

29.
The Firm 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, the Firm has 28 days from the date on which this First
Supervisory Notice is given to it to refer the matter to the Tribunal.

30.
A reference to the Tribunal can be made by way of a reference notice (Form FTC3)
signed by the Firm 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:
financeandtaxappeals@tribunals.gsi.gov.uk).

31.
Further details are contained in “Making a Reference to the UPPER TRIBUNAL (Tax
and Chancery Chamber)” which is available from the Tribunal website:

32.
The Firm 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 Denise Sbraga at the Financial
Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

Access to Evidence

33.
Section 394 of the Act does not apply to this First Supervisory Notice.

Confidentiality and Publicity

34.
The Firm should note that this Supervisory Notice may contain confidential
information and should not be disclosed to a third party (except for the purpose of
obtaining advice on its contents).

35.
The Firm should note that section 391 of the Act requires the Authority when the
First Supervisory Notice takes effect, to publish such information about the matter
as it considers appropriate.

Authority contacts

36.
For more information concerning this matter generally, contact Denise Sbraga,
Manager, Supervision Division at the Authority (direct line: 020 7066 4870 or email
denise.sbraga@fca.org.uk).

37.
Any questions regarding the procedures of the Regulatory Transactions Committee
should be directed to the RTC Secretariat (email rtcsecretariat@fca.org.uk).

Linda Woodall
Chair, Regulatory Transactions Committee

ANNEX A

RELEVANT STATUTORY PROVISIONS

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

the protection of consumers.

2. Section 55L of the Act allows the Authority to impose a new requirement on an

authorised person if it appears to the Authority that it is desirable to exercise the
power in order to advance one or more of the Authority’s operational objectives
(section 55L(2)(c)).

3. Section 55N of the Act allows a requirement to be imposed under section 55L of

the Act so as to require the person concerned to take specified action (section
55N(1)(a)). Section 55N(2) provides that a requirement may extend to activities
which are not regulated activities. Section 55N(5) provides that a requirement
may refer to the past conduct of the person concerned.

4. Section 165 of the Act provides that:

(1)
[the Authority] may, by notice in writing given to an authorised

person, require him to provide specified information or information of a
specified description; or to provide specified documents or documents of a
specified description;

(4)
this section applies only to information and documents reasonably

required in connection with the exercise by [the Authority] of functions
conferred on it by or under the Act.

5. Section 327 of the Act provides that:

(1)
the general prohibition does not apply to the carrying on of a
regulated activity by a person if the conditions set out in
subsections (2) to (7) are satisfied

(4)
the manner of the provision by [the Law Firm] of any service in the
course of carrying on the activities must be incidental to the
provision by him of professional services.

6. 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) But the Authority may not publish information under this section if

in its opinion, publication of the information would, be unfair to
the person with respect to whom the action was taken or proposed
to be taken [or] prejudicial to the interests of consumers…

(7) Information is to be published under this section in such manner as

the Authority considers appropriate.”

7. Article 39D of the RAO provides the definition of debt adjusting:

(1) When carried on in relation to debts due under a credit agreement—

(a) negotiating with the lender, on behalf of the borrower, terms for the
discharge of a debt,

(b) taking over, in return for payments by the borrower, that person's
obligation to discharge a debt, or

(c) any similar activity concerned with the liquidation of a debt,

is a specified kind of activity.

(2) When carried on in relation to debts due under a consumer hire agreement—

(a) negotiating with the owner, on behalf of the hirer, terms for the
discharge of a debt,

(b) taking over, in return for payments by the hirer, that person's
obligation to discharge a debt, or

(c) any similar activity concerned with the liquidation of a debt,

is a specified kind of activity.

8. Article 39E of the RAO provides the definition of debt-counselling.

(1) Giving advice to a borrower about the liquidation of a debt due under a credit
agreement is a specified kind of activity.

(2) Giving advice to a hirer about the liquidation of a debt due under a consumer
hire agreement is a specified kind of activity.

RELEVANT REGULATORY PROVISIONS

9. 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.

10. EG 8.1 reflects the provisions of section 55J of the Act that the Authority may use

its own-initiative power to vary or cancel the permission of an authorised firm
where it is desirable to exercise the power in order to advance one or more of its
operational objectives (EG 8.1(3)).

11. EG 8.1A provides that the powers to vary and cancel a person’s Part 4A

permission
and
to
impose
requirements
are
exercisable
in
the
same

circumstances.

12. 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. It will also have regard to the principle
that a restriction imposed on a firm should be proportionate to the objectives the
FCA is seeking to achieve.

13. 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 specifies that the Authority may
consider it to be appropriate where:

1) the Authority has serious concerns about a firm, or about the way its

business is being or has been conducted;

2) the Authority is concerned that the consequences of a firm not taking the

desired steps may be serious; and

3) the imposition of a formal statutory requirement reflects the importance

the FCA attaches to the need for the firm to address its concerns.