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FINAL NOTICE

1.
ACTION

1.1.
For the reasons given in this Final Notice, the Authority has decided to:

(1) make an order, pursuant to section 56 of the Financial Services and

Markets Act 2000 (“the Act”), prohibiting Mrs Colette Chiesa from

performing any function in relation to any regulated activity carried on by

an authorised person, exempt person or exempt professional firm;

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(2) withdraw, pursuant to section 63 of the Act, the approval given to Mrs

Chiesa to perform the CF4 (Partner) controlled function; and

(3) impose, pursuant to section 66 of the Act, a financial penalty of £50,000 on

Mrs Chiesa.

1.2.
On 26 October 2016 the Authority gave Mrs Chiesa a Decision Notice which

notified her that it had decided to take the actions referred to in paragraphs 1.1

(1) to (3). On 23 November 2016 Mrs Chiesa referred the Authority’s Decision

Notice to the Upper Tribunal (Tax and Chancery Chamber) (“the Tribunal”). On

19 September 2017, Mrs Chiesa applied to withdraw her reference and on 28

September 2017 the Tribunal gave its consent to this withdrawal. A Further

Decision Notice was given to her, pursuant to section 388(3) of the Act, in

respect of the same matter as the Decision Notice dated 26 October 2016.

1.3.
Following withdrawal of the reference to the Tribunal, the Authority has issued

2.
SUMMARY OF REASONS

2.1.
The Authority has decided to take the actions set out in paragraph 1.1(1) and

(2) because it has concluded that Mrs Chiesa is not fit and proper to perform

any function in relation to any regulated activity carried on by an authorised

person, exempt person or exempt professional firm. The Authority has

concluded that Mrs Chiesa lacks fitness and propriety on account of the lack of

integrity that she showed in her dealings with her trustee in sequestration.

Paragraphs 2.2 to 2.11 summarise the reasons why the Authority has reached

that conclusion.

2.2.
Mrs Chiesa, together with Mr Chiesa, was a founding partner of Planners, an

authorised firm which provided personal investment advice. Planners became

insolvent and went into sequestration in October 2011 as a consequence of

which, because they were partners at the firm (an unlimited liability partnership

formed under Scots law), Mr and Mrs Chiesa were at the same time also placed

in sequestration.

2.3.
At the time of their sequestration Planners, and Mr and Mrs Chiesa as partners

with unlimited liability for Planners’ debts, had significant liabilities due to the

need to pay compensation in respect of numerous valid complaints relating to

the advice Planners gave on GTEP sales. These liabilities began to accrue about

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three years prior to their sequestration, and during those three years Mr and

Mrs Chiesa took steps to protect their assets and money from tax and from

creditors’ claims. These steps included:

(1) the establishment of the WIFAR Trust, an off-shore remuneration trust, into

which the profits of Planners were directed, and from which Mr and Mrs

Chiesa received, between them, about £991,000 between December 2008

and March 2011, with the payments being made in the form of loans. The

Authority’s view is that those loans were never intended to be repaid

during their lifetimes and that if they were ever repaid the funds would

remain available to Mr and/or Mrs Chiesa;

(2) the rearrangement of their personal expense payments, so that from June

2011 onwards they were met from the bank accounts of Westwood

Trustees, a successful non-authorised business, founded by Mr and Mrs

Chiesa, which specialised in establishing off-shore remuneration trusts for

its clients. From June 2011, Mr and Mrs Chiesa also received funds directly

from Westwood Trustees for their own spending; and

(3) making changes to their ownership and control of Westwood Trustees. In

March 2011, when they each owned 50% of Westwood Trustees, Mr and

Mrs Chiesa decided that Westwood Trustees should issue new shares in

itself directly to the WIFAR Fiduciary Management Company, an off-shore

company which they owned and were the only directors of, which had the

effect of transferring ownership of 98% of Westwood Trustees to the

WIFAR Fiduciary Management Company. In August 2011, they then

resigned as directors of Westwood Trustees and of the WIFAR Fiduciary

Management Company, and transferred legal ownership of the WIFAR

Fiduciary Management Company to the director of the off-shore corporate

trustee of the WIFAR Trust, who also became its sole director. In fact,

notwithstanding these actions, after August 2011 they each retained

beneficial ownership of 50% of the WIFAR Fiduciary Management Company

(and therefore of Westwood Trustees) and Mr Chiesa retained de facto

control of Westwood Trustees.

2.4.
As a result of these actions, Mr and Mrs Chiesa were able to access significant

funds at a time when Planners was accruing significant liabilities (and therefore

Mr and Mrs Chiesa were too). Mr and Mrs Chiesa have continued to have access

to significant funds throughout their sequestration, including from the WTR

Trust, an off-shore remuneration trust established by Westwood Trustees’

directors in February 2012, and into which the profits of Westwood Trustees

were directed from that time onwards. Between August 2011 and December

2014, Mr and Mrs Chiesa jointly received, either directly or indirectly, a net

benefit of around £2.6 million from the profits of Westwood Trustees.

2.5.
In November 2011, a trustee in sequestration was appointed, whose role was to

establish the value of Mr and Mrs Chiesa’s assets and the level of their personal

liabilities, realise those assets for the benefit of their creditors, and assess

whether Mr and Mrs Chiesa were in the position to pay a regular financial

contribution to the sequestrated estate for the benefit of their creditors during

their sequestration. The Trustee’s role was also to review any transactions at an

undervalue that Mr and Mrs Chiesa had made in the five year period prior to the

commencement of their sequestration. In the weeks following his appointment,

the Trustee asked Mr and Mrs Chiesa to provide him with details of their

financial circumstances, including at a meeting in December 2011. Mrs Chiesa

permitted Mr Chiesa to take the lead in disclosing details of their financial

circumstances to the Trustee. However, Mr Chiesa misled the Trustee by

making inadequate, incomplete and/or misleading disclosures, thereby failing

adequately to disclose the true position, in respect of their financial

circumstances, including:

(1) the changes they had made to their ownership and control of Westwood

Trustees in order to protect their assets and money;

(2) the scale of the funds they were receiving directly from Westwood

Trustees;

(3) Westwood Trustees’ payment of significant personal expenses on their

behalf;

(4) the full extent of their high level of personal expenditure immediately

before and around the time of their sequestration;

(5) valuable assets that they still owned or had disposed of at an undervalue in

the previous five years; and

(6) their interest in any funds repaid under, and their control over, a £991,000

debt secured against two properties that they jointly owned.

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2.6.
Mrs Chiesa was aware that she and Mr Chiesa had a duty to disclose fully and

accurately all of their financial circumstances to the Trustee. However, Mrs

Chiesa acquiesced with Mr Chiesa’s misleading of the Trustee by failing to

challenge, correct or complete the account given by Mr Chiesa of their financial

circumstances at the meeting in December 2011 and assisted Mr Chiesa in

misleading the Trustee by signing forms at that meeting which she must have

known contained inadequate, incomplete and/or misleading information in

respect of her financial circumstances.

2.7.
Mrs Chiesa was also aware that she and Mr Chiesa had a duty to disclose fully

and accurately to the Trustee any change in their financial circumstances during

their sequestration. However, during their sequestration Mrs Chiesa continued

to acquiesce and assist with Mr Chiesa’s misleading of the Trustee by failing to

disclose material information regarding their financial circumstances and by

signing a form which she must have known contained inadequate, incomplete

and/or misleading information in respect of their financial circumstances. As a

result, the Trustee was unaware that during their sequestration:

(1) Mr and Mrs Chiesa had access to significant funds from Westwood Trustees,

including via the WTR Trust;

(2) Westwood Trustees was continuing to pay significant personal expenses on

their behalf;

(3) the level of their personal expenditure was significantly higher than

indicated; and

(4) Mrs Chiesa continued to own valuable jewellery that had not been disclosed

to the Trustee.

2.8.
Mrs Chiesa acquiesced and assisted in Mr Chiesa’s misleading of the Trustee in

order to avoid the Trustee inquiring into – and possibly recovering for the

benefit of their and Planners’ creditors - assets which they legally or beneficially

owned or in which they had some form of interest and/or control either directly

or indirectly.

2.9.
In contrast to his disclosures to the Trustee, which gave the Trustee the

impression that Mrs Chiesa had no material assets, Mr Chiesa had disclosed to

one of his banks, a few months before they were placed in sequestration, that

she owned assets, including her share of assets that they jointly owned, with a

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total value of around £620,000. Further, during her sequestration, when the

Trustee was under the impression that she had limited income, Mrs Chiesa made

a loan application to a bank in which she disclosed that she was receiving

income of £100,000 per annum. In the Authority’s view, Mr and Mrs Chiesa

knowingly disclosed fundamentally different and contradictory information to

their banks and to the Trustee, and in both cases the information they disclosed

was that which would best support their objectives in supplying that

information. The Authority considers the fact that Mrs Chiesa must have been

aware that her disclosure to the bank that she was receiving income of

£100,000 per annum conflicted with the Trustee’s understanding that she had

limited income, yet failed to correct the Trustee’s understanding, is evidence of

her lack of integrity.

2.10.
As a consequence of Mrs Chiesa’s deliberate acquiescence and assistance with

Mr Chiesa’s misleading disclosures to the Trustee regarding their financial

circumstances, the Trustee was misled as to the true value of the assets in their

estates, transactions at an undervalue that Mr and/or Mrs Chiesa had made in

the five year period prior to the commencement of their sequestration, their

access to funds and the level of financial contributions to their sequestrated

estates for the benefit of their creditors that Mr and Mrs Chiesa were able to

make. Planners, and therefore Mr and Mrs Chiesa, had over £5 million of

liabilities, mainly arising from customer claims in respect of mis-sales of GTEPs

by Planners. The FSCS has to date paid out over £3.8 million to former

customers of Planners; the FSCS’s cap of £50,000 per claim has, however,

meant that many of Planners’ former customers have been unable to recover

the full amount they were entitled to recover.

2.11.
Mrs Chiesa’s lack of integrity in her dealings with the Trustee demonstrates that

she is not a fit and proper person to perform any function in relation to any

regulated activity carried on by an authorised person, exempt person or exempt

professional firm. Further, she poses a risk to consumers, as is demonstrated

by her actions which had the effect of misleading of the Trustee in order to avoid

paying her creditors, including former customers of Planners who were owed

compensation.

2.12.
The Authority has therefore decided to make an order, pursuant to section 56 of

the Act, prohibiting Mrs Chiesa from performing any such function and has

decided, pursuant to section 63 of the Act, to withdraw the approval given to

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Mrs Chiesa under section 61 of the Act to perform the CF4 (Partner) controlled

function.

2.13.
The Authority has also decided to impose a financial penalty under section 66 of

the Act because Mrs Chiesa has breached Statement of Principle 4 (relations

with regulator) of the Statements of Principle. Mrs Chiesa failed to deal with the

Authority in an open and cooperative way by making misleading statements

during a compelled interview with the Authority, which was held in order to

gather information about Mr and Mrs Chiesa’s conduct prior to and during their

sequestration relevant to their fitness and propriety.

2.14.
Mrs Chiesa attempted to mislead the Authority by making statements which

were designed to give the Authority the impression that she lacked capability

and knowledge and understanding of the business and financial arrangements of

Planners and Westwood Trustees, whereas in fact she understood and had an

important role in both businesses. She also attempted to mislead the Authority

about her failure to disclose her ownership of valuable jewellery.

2.15.
The Authority’s actions support its operational objectives of securing an

appropriate degree of protection for consumers and protecting and enhancing

the integrity of the UK financial system.

3.
DEFINITIONS

3.1.
The definitions below are used in this Notice.

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

“APER” means the Statements of Principle and Code of Practice for Approved

Persons section of the Handbook;

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

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

Authority;

“DEPP” means the Decision Procedure and Penalties Manual section of the

Handbook;

“EG” means the Enforcement Guide part of the Handbook;

“FIT” means the Fit and Proper Test for Approved Persons section of the

Handbook;

“FOS” means the Financial Ombudsman Service;

“FSCS” means the Financial Services Compensation Scheme;

“GTEP” means geared traded endowment policy;

“the Handbook” means the Authority’s Handbook of rules and guidance;

“Mr Chiesa” refers to John Andrew Gerard Chiesa, Mrs Chiesa’s husband, also

approved to perform the CF4 (Partner) controlled function at Planners, and

formerly a director of Westwood Trustees;

“Planners” means the authorised firm called Westwood, which also traded as

Westwood Independent Financial Planners and Westwood Independent Financial

Advisers, which was formed with unlimited liability under Scots law;

“Statements of Principle” means the Statements of Principle issued by the

Authority under section 64 of the Act and set out in APER;

“TEP” means traded endowment policy;

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

“the Trustee” means the trustee in sequestration appointed on 16 November

2011 in respect of Mr and Mrs Chiesa’s sequestration;

“Westwood Trustees” means Asset House Piccadilly Limited (company number

SC182931), which until 15 September 2016 was known as Westwood Trustees

Limited;

“WIFAR Fiduciary Management Company” has the definition set out in paragraph

4.7 of this Notice;

“WIFAR Trust” means the Westwood Independent Financial Advisers off-shore

remuneration trust;

“WTR Fiduciary Management Company” has the definition set out in paragraph

4.39 of this Notice; and

“WTR Trust” means the Westwood Trustees off-shore remuneration trust.

4.
FACTS AND MATTERS

4.1.
Mr and Mrs Chiesa founded Planners in 1994. They were both partners at the

firm, which traded principally as Westwood Independent Financial Planners and

Westwood Independent Financial Advisers. Until its sequestration on 18 October

2011, Planners provided personal investment advice from its office in

Motherwell, Scotland. Mr and Mrs Chiesa opened a second Planners office in

London in or around 2006.

4.2.
In or around 2005, Planners began advising customers to invest in GTEPs. The

nature of the sales of GTEPs by Planners formed the basis of later regulatory

action taken by the Authority that resulted in a financial penalty of £100,000

being imposed on Planners on 17 December 2013 after the Tribunal upheld the

Authority’s decision to impose such a penalty. GTEPs involve an initial

investment to buy a selection of TEPs and then the borrowing of a further

amount to purchase additional TEPs (i.e. gearing, hence GTEP). The portfolio of

TEPs acquired was used as security for a loan facility to buy the additional TEPs

and to fund the various payments throughout the life of the GTEP plan. The

Tribunal concluded that the GTEP plan sold by Planners was high-risk because of

the gearing and other factors which, when taken together, raise the level of risk

inherent in the plan. The Tribunal also held that, as the GTEP plan was high-

risk, it was not suitable for those customers with a lower risk tolerance who

were advised by Planners to invest in GTEPs.

Mr and Mrs Chiesa’s financial affairs prior to their sequestration

4.3.
Between 2008 and their sequestration on 18 October 2011, Planners, and Mr

and Mrs Chiesa in their capacity as partners with unlimited liability for Planners’

debts, began to accrue significant liabilities due to the need to pay

compensation in respect of numerous valid complaints relating to the advice

they gave on GTEP sales. During this period Mr and Mrs Chiesa began to take

steps to protect their assets and money from tax and from creditors’ claims.

4.4.
In April 2008, the Authority commenced an investigation into Planners’ sales of

GTEPs. The investigation into Planners coincided with five other investigations

by the Authority into firms selling GTEPs, which resulted in financial penalties of

£10,500 and £35,000 being imposed on two firms in October 2008. In May

2010, the Authority publicly censured another firm and stated in the final notice

that it would have imposed a financial penalty of £350,000 on that firm but for

its insolvency.

4.5.
In December 2008, the Authority advised Mr and Mrs Chiesa that it proposed to

impose a significant financial penalty on Planners on the basis that Planners had

failed to ensure it gave suitable advice in relation to GTEPs. Therefore, no later

than December 2008, Mr and Mrs Chiesa were aware that it was possible

Planners would be subject to a financial penalty imposed upon it by the

Authority in addition to potential compensation payments to customers.

Mr and Mrs Chiesa’s first off-shore remuneration trust

4.6.
In November 2008, Mr and Mrs Chiesa, in their capacity as unlimited liability

partners at Planners, together established the WIFAR Trust, an off-shore

remuneration trust incorporated in Belize. Their purpose in establishing the

trust was to reduce Planners’ profits and therefore their tax liabilities, whilst

permitting them to continue to gain access to the funds generated from

Planners’ trading activities, and whilst also protecting those funds from the

claims of any future creditors.

4.7.
Between December 2008 and November 2011, Mr and Mrs Chiesa directed the

profits of Planners, as well as other assets of Mr and Mrs Chiesa or parties

connected to them, into the WIFAR Trust. The WIFAR Trust was administered

by an off-shore trustee company, which delegated control of the trust property

to another off-shore company that Mr and Mrs Chiesa had themselves

specifically incorporated (the “WIFAR Fiduciary Management Company”). Until

August 2011, Mr and Mrs Chiesa were the only directors and shareholders of the

WIFAR Fiduciary Management Company.

4.8.
When Mr and/or Mrs Chiesa wished to access money, they requested it from the

WIFAR Trust via the WIFAR Fiduciary Management Company. Mr and Mrs

Chiesa received, between them, around £991,000 from the WIFAR Trust

between December 2008 and March 2011, of which Mrs Chiesa’s share was

around £662,200. The payments were made in the form of loans (with interest

accruing), however, the Authority’s view is that, in reality, those loans were

never intended to be repaid during their lifetimes because:

(1) the WIFAR Trust property comprised assets that would otherwise have

accrued to Mr and Mrs Chiesa, including the profits from Planners;

(2) Mr and Mrs Chiesa had effective control over the actions of the off-shore

trustee, due to their power under the WIFAR Trust deed to remove and

replace that trustee. This meant the off-shore trustee was unlikely ever to

recall the loans made to Mr or Mrs Chiesa from the WIFAR Trust;

(3) the off-shore trustee had in any event delegated total control of the WIFAR

Trust property to the WIFAR Fiduciary Management Company that Mr and

Mrs Chiesa had incorporated and legally owned until August 2011 and

beneficially thereafter (see paragraph 4.20(3) below); and

(4) the business of Westwood Trustees, developed by Mr and Mrs Chiesa,

involved introducing clients to off-shore remuneration trusts from which the

clients were intended to receive financial benefits, in particular the

reduction in their tax liabilities, the continued ability to access the funds

generated from their trading activities and the protection of those funds

from any creditors (see paragraphs 4.11 to 4.12 below for an explanation

of Westwood Trustees’ business).

GTEP complaints

4.9.
From around February 2011, the FOS began to receive an increasing number of

complaints from customers of Planners who had been advised to buy GTEPs. In

May 2011, the Authority issued a Decision Notice to Planners, which set out the

Authority’s decision to impose a financial penalty of £100,000 on the firm for its

failure to give suitable advice in relation to its GTEP sales. Mr and Mrs Chiesa

referred that Decision Notice to the Tribunal and in November 2013 the Tribunal

upheld the Authority’s decision.

4.10.
In June 2011, four months before their sequestration, Mr and Mrs Chiesa sold

Planners’ business book to a colleague’s company, which received a list of

existing and potential customers and did not assume any of Planners’ liabilities.

At that time, in addition to being aware that significant liabilities were arising to

past customers of Planners, Mr and Mrs Chiesa were also aware that the

Authority had decided to impose a £100,000 financial penalty on Planners and

that an increasing number of GTEP customers were making complaints.

Mr and Mrs Chiesa’s off-shore remuneration trusts business

4.11.
From around 2010, Mr and Mrs Chiesa began to focus on another business,

Westwood Trustees, a small non-authorised firm which they had founded in

1998. Although that business had been secondary to Planners (it originally

provided a will-writing service to Planners’ customers), Mr and Mrs Chiesa began

to develop the Westwood Trustees business, by acting as an introducer for a

firm which established off-shore remuneration trusts. The purpose of these off-

shore remuneration trusts, like the WIFAR Trust, was to reduce their client’s

profits and therefore their client’s tax liabilities, whilst permitting their client to

continue to gain access to the funds generated from their trading activities, and

whilst also protecting those funds from the claims of any future creditors.

4.12.
Westwood Trustees began to build a network of other introducers and earned

commission on every new client introduced, calculated as a percentage of the

total value of assets that each new client placed into their own off-shore

remuneration trust. Westwood Trustees was a successful introducer and,

around 2006, developed its business model so that it included establishing off-

shore remuneration trusts itself for its own clients. Westwood Trustees

promoted the financial benefits of these off-shore remuneration trusts on its

website under headings such as “Protect your Assets from Tax”, “Shield your

Assets from Creditors” and “You’ve worked hard for your money, now learn how

to keep it”.

4.13.
By 2011, Westwood Trustees had built a large network of its own introducers

and was turning over around £1 million per annum, while liabilities from the

Planners business continued to mount.

4.14.
In June 2011, four months before their sequestration, Mr Chiesa declared to his

bank that Mrs Chiesa’s interest in two properties that they jointly owned totalled

£270,000, and that the value of his (and therefore her) share of the Westwood

Trustees business was £350,000. He also declared that he owned assets with a

net value of £942,600 and that he had an annual income of £325,000.

Mrs Chiesa’s capability and understanding of financial matters

4.15.
Mrs Chiesa has been involved in financial services since she and Mr Chiesa

founded Planners in 1994. She was approved to perform the CF4 (Partner)

controlled function at Planners on 1 December 2001. She also held the CF21

(Investment Adviser) controlled function from 11 December 2001 to October

2003. She occupied an operational management role at Planners and shared

responsibility for the strategic direction of the partnership with Mr Chiesa, who

occupied the lead advisory and customer-facing role. It was Mrs Chiesa who

was responsible for authorising and executing Planners’ transactions, including

commission payments to Planners’ advisers and salaries to staff. While at

Planners she obtained the Chartered Insurance Institute’s Certificate in Financial

Planning and she told the Authority that by taking the FPC exams, she

understood the products that Planners was selling.

4.16.
Mrs Chiesa was a director of Westwood Trustees from 12 February 1998 to 1

September 2004 and from 16 March 2009 to 17 August 2011, and a secretary of

the company from 1 September 2004 to 17 August 2011. While her role at

Westwood Trustees was more limited than that of Mr Chiesa, who was the

driving force behind its growth, Mrs Chiesa was involved in managing and

promoting the business and aware of the services that it offered. Westwood

Trustees’ website in 2009 described her previous business development

experience and input as “invaluable to the growth and development of

Westwood”, and she, together with Mr Chiesa, was marketed as the public face

of Westwood Trustees, including in press releases and on its website. After they

resigned as directors of Westwood Trustees in August 2011 (see paragraph

4.20(2) below), Mr and Mrs Chiesa continued until July 2014 to be featured

prominently as the most senior staff on Westwood Trustees’ website.

4.17.
The Authority concludes that, while Mr Chiesa was the driving force behind

Planners and Westwood Trustees, Mrs Chiesa was a competent and experienced

manager, capable of understanding and dealing with complex documentation.

The debt giving rise to Planners’ and Mr and Mrs Chiesa’s sequestration,

and Mr and Mrs Chiesa’s rearrangement of their financial affairs

4.18.
In the first half of 2011, Planners was overdue in paying commission to two of

Planners’ advisers, despite having already received the commission payments

from the relevant product providers.

4.19.
On 16 March 2011, at which time Mr and Mrs Chiesa each owned 50% of

Westwood Trustees and were two of the four directors of the company, at Mr

Chiesa’s instigation, Mr and Mrs Chiesa changed their ownership of Westwood

Trustees. They did this by deciding that Westwood Trustees should issue 4,900

new shares in itself directly to the WIFAR Fiduciary Management Company, at a

cost of £1 per share, which had the effect of transferring ownership of 98% of

Westwood Trustees to the WIFAR Fiduciary Management Company (of which Mr

and Mrs Chiesa were the sole directors and shareholders).

4.20.
Between June and August 2011, while the commission Planners owed to the two

advisers remained unpaid and for which they had joint and several liability as

partners in that firm, at Mr Chiesa’s instigation, Mr and Mrs Chiesa further

rearranged their financial affairs in connection with their more profitable

business, Westwood Trustees. They did so in three key ways:

(1) First, from June 2011, they rearranged their personal expense payments so

that they were met from Westwood Trustees’ bank accounts, rather than

from their own personal bank accounts, and also received funds directly

from Westwood Trustees’ accounts for their own spending:

(i)
Mrs Chiesa arranged for Westwood Trustees to pay the premiums on

three of her life assurance policies and costs associated with the

Mercedes and Porsche vehicles she drove; and

(ii)
Mr and Mrs Chiesa together arranged for Westwood Trustees to pay

significant joint expenses such as their rental of residential properties in

London, travel expenses and investments.

(2) Secondly, having become the sole directors of Westwood Trustees on 25

July 2011, Mr and Mrs Chiesa resigned as directors on 11 August 2011. By

mid-November 2011 two previous members of its administrative staff

constituted the board of directors of Westwood Trustees, and they were

joined by two other previous members of its administrative staff in

February 2012. None of those individuals had any prior experience in

being a director of a company.

(3) Thirdly, Mr and Mrs Chiesa made changes to their ownership of Westwood

Trustees. Previously they had owned 100% of Westwood Trustees, 98% of

which they had held, since 16 March 2011, indirectly via the off-shore

WIFAR Fiduciary Management Company. In August 2011 they resigned as

directors of the WIFAR Fiduciary Management Company and transferred

legal ownership of that company to the director of an off-shore company,

which was also the trustee of the WIFAR Trust, and who also became its

sole director. The shares they transferred in the WIFAR Fiduciary

Management Company were held in trust for Mr and Mrs Chiesa by the

director of the off-shore company, so that Mr and Mrs Chiesa continued to

wholly own that company beneficially. This left Mr and Mrs Chiesa each

holding only 1% of Westwood Trustees’ shares, whereas in fact through the

trust each continued beneficially to own, directly and indirectly, 50% of

Westwood Trustees’ shares.

4.21.
During the month of August 2011 alone, Mr and Mrs Chiesa received the benefit

of £116,370 paid out on their behalf by Westwood Trustees. By the end of

2011, they had received a further £109,000, and in 2012 they received a further

£426,000. By the end of 2014, they had received a total benefit of

approximately £1.39 million, of which £1.17 million was expenses paid on their

behalf, which is a monthly average of over £34,000, paid by Westwood Trustees

to cover Mr and Mrs Chiesa’s combined personal expenditure. Until December

2013, the minimum benefit they received in any one month was over £20,000.

The £1.39 million that they received in total included, in relation to Mrs Chiesa,

spending of a minimum of £28,000 on clothes and jewellery, £10,000 on

cosmetic dental treatment, £15,000 on travel costs plus at least £30,000 in

foreign currency, £36,000 on interior design, and £36,000 on party and catering

costs.

4.22.
By the end of August 2011, the commission owed to two of Planners’ advisers

remained unpaid, even though Mr and Mrs Chiesa had rearranged their finances

to continue receiving the benefit of Westwood Trustees’ profits, and Mr Chiesa

had recently declared to his bank that he and Mrs Chiesa had substantial

personal assets and financial resources. Funds were therefore available to Mrs

Chiesa personally to pay these debts.

Sequestrations

4.23.
Planners and Mr and Mrs Chiesa failed to comply with requests by the advisers

to pay them their commission and, on 18 October 2011, one of the advisers

petitioned for the sequestration of Planners and Mr and Mrs Chiesa on the basis

of the debt owed to him, which amounted to £40,443. The petition was

unchallenged and their sequestration was awarded on 16 November 2011. Mr

and Mrs Chiesa were discharged from their debts 12 months after being placed

in sequestration, on 18 October 2012.

4.24.
The sequestration of Planners meant that all claims against the firm filed with

the FOS at that date were referred to the FSCS, because of Planners’ default.

Since Planners’ sequestration, the FSCS has received over 100 claims against Mr

and Mrs Chiesa trading as Planners. As at 19 September 2016, the FSCS had

paid out a total of £3,856,618 in compensation. It is likely that these customers

would have been entitled to total compensation of over £5 million, however a

number of the claims to the FSCS were subject to the FSCS cap of £50,000 per

individual.

Mr and Mrs Chiesa’s disclosures to the Trustee

4.25.
On 16 November 2011, a trustee in sequestration was appointed, whose role

was to establish the value of Mr and Mrs Chiesa’s assets and income and the

level of their liabilities and expenses, realise those assets for the benefit of their

creditors and assess whether Mr and Mrs Chiesa were in the position to pay a

regular financial contribution to their creditors during their sequestration. The

Trustee’s role was also to review any transactions at an undervalue that Mr and

Mrs Chiesa had made in the five year period prior to the commencement of their

sequestration.

4.26.
In the weeks following his appointment, until early January 2012, the Trustee

asked Mr and Mrs Chiesa to provide him with details of their financial

circumstances, including at a meeting on 20 December 2011. It was Mr Chiesa

who responded to the Trustee’s requests and provided the Trustee with details

of both his and Mrs Chiesa’s financial circumstances, including at the 20

December 2011 meeting. It was also Mr Chiesa who responded to any queries

that the Trustee raised about their financial circumstances during their

sequestration.

4.27.
At the meeting on 20 December 2011, the Trustee reminded Mr and Mrs Chiesa

that they had an obligation to disclose fully and accurately all of their financial

circumstances, and explained in detail the nature of this obligation. During the

meeting, the Trustee asked Mr and Mrs Chiesa questions about their financial

circumstances, including about any income that they had access to, the size of

their monthly personal expenditure, and whether they possessed any assets of

value, or had disposed of any at an undervalue in the previous five years, or had

liabilities. Mr Chiesa answered these questions on behalf of Mrs Chiesa, who

was present throughout the meeting.

4.28.
The Trustee filled in two forms on the basis of the information provided by Mr

Chiesa about Mrs Chiesa’s financial circumstances: a Statement of Assets and

Liabilities (Form 3) and a Supplementary Questionnaire. The Statement of

Assets and Liabilities included the following statements: “I have stated in this

statement details of all my assets, liabilities and income as at the date of my

bankruptcy on 16 Nov 2011” and “I certify that the information I have supplied

in Form 3 is true, complete and accurate to the best of my knowledge and

belief.” The Supplementary Questionnaire included a similar declaration and

both forms included warnings that it was an offence for Mrs Chiesa to make

false statements in relation to her assets, liabilities and financial affairs. Mrs

Chiesa signed both of these forms at the 20 December 2011 meeting. She also

signed a Statement of Undertakings, dated 16 December 2011, in which she

confirmed, among other things, that:

(1) She had a legal obligation to co-operate with the Trustee and to provide

any financial information or documents which the Trustee may require;

(2) She had made a full disclosure of all assets which she owned or in which

she had an interest as at the date of her sequestration, and that she would

notify the Trustee if she acquired any further assets during the period of

her sequestration; and

(3) She would immediately inform the Trustee of any change in her financial

circumstances during the period of her sequestration.

4.29.
The Trustee also filled in a Statement of Assets and Liabilities and a

Supplementary Questionnaire on the basis of the information provided by Mr

Chiesa about his own financial circumstances. Mr Chiesa signed these forms at

the meeting on 20 December 2011 and signed a Statement of Undertakings on

16 December 2011.

4.30.
Mr Chiesa did not inform the Trustee of the changes that he and Mrs Chiesa had

made to their ownership and control of Westwood Trustees which had the effect

of protecting their assets and money, or that they had access to significant

funds. Instead, the information Mr Chiesa provided to the Trustee was designed

to give the impression that they did not have access to significant funds, had no

net assets, and had limited income and relatively modest expenditure, to the

extent that they each could only afford to contribute £200 per month to the

sequestrated estate for the benefit of their creditors. In particular, Mr Chiesa

misled the Trustee by telling him (or by omission leading him to believe) that:

(1) they were receiving very limited income and were therefore dependent on

loans from third parties to cover their monthly expenses (see (2) below);

(2) their combined monthly expenses were relatively modest: around £2,745

per month to cover their mortgage payments, bills, and very limited

personal expenses;

(3) they had no valuable assets: in particular, Mr Chiesa did not disclose details

of their continued beneficial ownership of Westwood Trustees and the

WIFAR Fiduciary Management Company, or that Mrs Chiesa owned valuable

jewellery;

(4) they had not transferred any valuable assets to third parties at an

undervalue in the previous five years; and

(5) they owed a debt of £991,000 to the WIFAR Trust, for which two of their

properties were charged as security.

4.31.
Despite being aware that she had a duty to disclose fully and accurately all of

her financial circumstances to the Trustee, Mrs Chiesa acquiesced with Mr

Chiesa’s misleading of the Trustee by failing to challenge, correct or complete

the account given by Mr Chiesa of their financial circumstances at the 20

December 2011 and assisted Mr Chiesa in misleading the Trustee by signing

forms at that meeting which she knew contained incomplete, inaccurate and

misleading information in respect of her financial circumstances.

Mr and Mrs Chiesa’s failure to disclose their access to Westwood

Trustees’ profits

4.32.
Contrary to Mr Chiesa’s representations to the Trustee that he and Mrs Chiesa

were reliant on loans from a third party, had limited income and expenditure

and no net assets, in reality, they had access to ample funds to sustain a

luxurious lifestyle.

4.33.
Mrs Chiesa was aware when Mr Chiesa told the Trustee (or by omission led the

Trustee to understand) that they were reliant on loans and had limited income

and expenditure and no net assets, that her husband’s relationship with

Westwood Trustees had not changed in any material sense upon their

sequestration, and that in fact he continued to drive the business forward and

retained de facto control of it, and that they both had access to its significant

profits.

4.34.
Mr Chiesa remained the principal sales consultant at Westwood Trustees after he

and Mrs Chiesa were placed in sequestration, bringing in the majority of new

business. He also continued to provide advice to, and exercise influence over,

the previous members of Westwood Trustees’ administrative staff who, during

their sequestration, were the only appointed directors of Westwood Trustees.

One of these directors resigned in June 2013 but the other three directors

remain in place. Mrs Chiesa knowingly continued to receive the financial benefit

of Mr Chiesa’s continued de facto control over Westwood Trustees.

4.35.
As set out at paragraphs 4.20(1) and 4.21 above, from June 2011 Mr and Mrs

Chiesa had their expenses paid from Westwood Trustees’ accounts and received

further funds into their personal bank accounts directly from Westwood

Trustees. Although Mr Chiesa provided the Trustee with bank statements which

showed that Westwood Trustees had made three payments of either £1,000 or

£2,000 to Mr and Mrs Chiesa’s personal joint bank account between 23

November 2011 and 4 January 2012, neither he nor Mrs Chiesa disclosed to the

Trustee the scale of the funds that they were receiving directly from Westwood

Trustees, nor that Westwood Trustees was paying significant personal expenses

on their behalf on a regular basis.

4.36.
These expenses included £166,000 of legal costs incurred by Mr and Mrs Chiesa

during the Tribunal proceedings relating to their reference of the Decision Notice

given to Planners by the Authority in May 2011. In February 2012 Mr and Mrs

Chiesa’s legal representatives drew up the documentation to enable the new

directors of Westwood Trustees to continue to make these payments, and that

documentation described the expense to Westwood Trustees as a reflection of

the continued “fundamental commercial importance” of both Mr and Mrs Chiesa

to the business.

4.37.
From April 2012, six months into their sequestration, Mr and Mrs Chiesa also

began to receive funds from Westwood Trustees via an off-shore remuneration

trust, the WTR Trust. The WTR Trust was established by Westwood Trustees’

directors on 7 February 2012 and is similar in structure to the WIFAR Trust that

Mr and Mrs Chiesa had used to direct the profits of Planners.

4.38.
The WTR Trust is structured so that Mr and Mrs Chiesa, or parties closely

connected to them, can retain access to the trust property, which comprises

funds derived from the profits of Westwood Trustees. Those profits are intended

to be protected in the WTR Trust from tax liabilities and from creditor claims.

4.39.
The WTR Trust is administered by an off-shore trustee, which was also the

trustee of the WIFAR Trust, but also by another company, based in the UK,

which was specifically incorporated for the purpose of the WTR Trust (the “WTR

Fiduciary Management Company”) and which acts on behalf of the off-shore

trustee.

4.40.
When Mr and/or Mrs Chiesa wished to access the WTR Trust funds from April

2012 onwards, they made a request to the WTR Fiduciary Management

Company. The directors and controllers of the WTR Fiduciary Management

Company have always been the directors of Westwood Trustees and therefore

closely connected to Mr and Mrs Chiesa.

4.41.
Payments are made from the WTR Trust in the form of loans (with interest

accruing). However, the Authority’s view is that, in reality, those loans are

never intended to be repaid by Mr or Mrs Chiesa during their lifetimes because:

(1)
the business of Westwood Trustees, developed by Mr and Mrs Chiesa,

involved introducing clients to off-shore remuneration trusts from which

the clients were intended to receive financial benefits, in particular the

reduction in their tax liabilities, the continued ability to access the funds

generated from their trading activities and the protection of those funds

from any creditors.

(2)
monies in the WTR Trust were derived from the profits of Westwood

Trustees, which Mr and Mrs Chiesa continued, directly and indirectly, to

wholly beneficially own;

(3)
Mr Chiesa, by remaining the primary driver of new business and exercising

influence
over
the
firm’s
directors,
continued
throughout
their

sequestration to exercise de facto control over the business of Westwood

Trustees, and sought to gain the benefit of the profits generated in that

period;

(4)
Mr and Mrs Chiesa, or parties closely connected to them, have had

effective control over the off-shore trustee, due to their power under the

WTR Trust deed to remove and replace that trustee. This means the off-

shore trustee is unlikely ever to recall the loans made to Mr or Mrs Chiesa

from the WTR Trust; and

(5)
the off-shore trustee has in any event delegated total control of the WTR

Trust property to the WTR Fiduciary Management Company, of which the

directors and controllers are individuals closely connected to Mr and Mrs

Chiesa.

4.42.
As much as 97% of Westwood Trustees’ profits were paid into the WTR Trust in

the 12 months up to August 2014. These profits were paid into a designated UK

bank account held in the name of the WTR Fiduciary Management Company.

Together, Mr and Mrs Chiesa received approximately £780,000 of Westwood

Trustees’ profits via the WTR Trust in 2012, and a total of approximately £2.6

million between April 2012 and December 2014, at an average of over £84,000

per month. Of this, they used £1.42 million to regularly ‘repay’ the money they

had either received directly from Westwood Trustees or had been paid in the

form of expenses (as per paragraph 4.35 above). In total, Mr and Mrs Chiesa

received approximately 53% of the funds derived from the profits of Westwood

Trustees paid into the WTR Trust between February 2012 and December 2014.

In contrast, the Westwood Trustees directors during that period received

between them approximately £420,000 from the WTR Trust, which is

approximately 8.6% of Westwood Trustees’ profits.

4.43.
In July 2013, Mrs Chiesa declared in a banking application that she was

receiving income of £100,000 per annum and income after tax of £5,000 per

month, in connection with her employment at a company called “Westwood”.

4.44.
Until November 2014, although her involvement with Westwood Trustees

appears to have been limited after sequestration, Mrs Chiesa continued to be

marketed as a senior manager of the business, including having her role

described as “Client Relationships” on the company’s new website, which was

launched around early 2012.

4.45.
Mr and Mrs Chiesa were aware, having each signed a Statement of

Undertakings, that they had a duty to declare material changes in their financial

circumstances during the period of their sequestration to the Trustee. In May

2012, October 2012 and November 2012, the Trustee wrote to each of Mr and

Mrs Chiesa, reminding them of their duty to provide any information that the

Trustee may require regarding their assets and financial affairs, and asking

them to complete a form detailing the current state of their affairs. Mr and Mrs

Chiesa did not respond to the May 2012 and November 2012 letters. In

response to the October 2012 letter, Mr Chiesa sent the Trustee two completed

forms, one signed by him and the other by Mrs Chiesa. Both of these forms

stated that Mr and Mrs Chiesa were receiving monthly income from consultancy

work of £2,000 and £1,700 respectively and that their monthly expenditure was

£1,980 and £1,612 respectively (including the £200 they were each contributing

to the sequestrated estate). Neither Mr Chiesa nor Mrs Chiesa informed the

Trustee of the funds they were receiving from the WTR Trust, or that Westwood

Trustees was paying significant personal expenses on their behalf. The Trustee

therefore continued to administer Mr and Mrs Chiesa’s sequestrated estate on

the basis that their financial position had not materially changed since December

2011.

Mr and Mrs Chiesa’s failure to disclose their high personal spending

4.46.
Contrary to Mr Chiesa’s disclosure to the Trustee in December 2011 that his and

Mrs Chiesa’s joint living expenses amounted to around £2,745 per month, and

his and Mrs Chiesa’s disclosure to the Trustee in October 2012 that their

combined living expenditure was about £3,600 per month (including their £400

contribution to the sequestrated estate), in reality, they continued to enjoy a

much higher standard of living. Their joint living expenses at these times were,

in fact, at least £9,000 per month, and they had significant additional expenses.

4.47.
In June 2011, four months before their sequestration, Mr Chiesa declared to a

bank that he and Mrs Chiesa had combined living expenses of £9,425 per

month. This included monthly rental/mortgage costs of £6,000.

4.48.
In July 2013, nine months after they had been discharged from their debts, but

while they were still in sequestration and therefore continued to have a duty to

disclose changes in their financial circumstances to the Trustee, Mr and Mrs

Chiesa declared to a bank combined total monthly expenses of £9,300 and a

combined monthly disposable income after expenses of £10,700.

4.49.
From May 2011 until at least October 2012, Mr and Mrs Chiesa’s monthly rental

on their London address was around £5,000. This was paid for them out of a

Westwood Trustees account, which had the effect of concealing this expense

from the Trustee. Neither Mr Chiesa nor Mrs Chiesa notified the Trustee of this

rental liability.

4.50.
In addition to their monthly living expenses, Mr and Mrs Chiesa’s other monthly

spending was high, and of a nature which conflicted with Mr Chiesa’s

representations to the Trustee, which Mrs Chiesa had not challenged or

corrected, that they had limited income and expenditure and no net assets, and

with the minimal contribution of £200 per month that they were each paying to

their sequestrated estate. By way of example, between October 2011 and July

2013 Mrs Chiesa spent an average monthly amount of £6,000 on clothing and

jewellery, interior design, cosmetic dental treatment, travel and foreign currency

and her Porsche car. Neither Mr Chiesa nor Mrs Chiesa disclosed either the level

or the nature of this spending to the Trustee at any time during their

sequestration.

4.51.
Mrs Chiesa did not disclose the true level and nature of her personal spending,

and did not challenge or correct the information Mr Chiesa provided to the

Trustee about the level of her personal expenditure, and the effect of this was to

minimise the chance of further investigation into the source of the funds they

were receiving. She deliberately acquiesced and assisted with Mr Chiesa’s

misleading of the Trustee, which led the Trustee to believe that the loans they

were living off were relatively modest and designed to cover relatively modest

day-to-day living expenses.

4.52.
Mrs Chiesa continued to enjoy a lifestyle throughout her sequestration that was

in conflict with her declared status as a bankrupt who could afford to pay only

£200 per month to her creditors.

Mr and Mrs Chiesa’s failure to disclose valuable assets and/or the

transfer of valuable assets at an undervalue in the five years before

sequestration

4.53.
Mr Chiesa’s disclosure to the Trustee, which Mrs Chiesa did not correct or

challenge, that he and Mrs Chiesa owned no valuable assets at the time they

were placed in sequestration, and had not transferred any valuable assets to

third parties at an undervalue in the five years before sequestration, was

inaccurate and misleading.

4.54.
In fact, they each had legal ownership of 1% of Westwood Trustees and

beneficial ownership of 50% of the WIFAR Fiduciary Management Company,

which owned 98% of Westwood Trustees (see paragraph 4.20(3) above).

Although Mr Chiesa informed the Trustee that he and Mrs Chiesa each had legal

ownership of 1% of Westwood Trustees, neither he nor Mrs Chiesa disclosed to

the Trustee that Westwood Trustees was a valuable company capable of paying

over £1 million per annum into an off-shore remuneration trust for the benefit of

Mr and Mrs Chiesa and others connected with Westwood Trustees. They also did

not disclose their beneficial ownership of the WIFAR Fiduciary Management

Company, and therefore of the remaining 98% of Westwood Trustees, nor the

transfers of ownership that had taken place in March 2011 and August 2011

which resulted in them no longer having 100% legal ownership of both

companies (see paragraphs 4.19 and 4.20(3) above). The Authority considers

that these transfers were made as part of the steps taken by Mr and Mrs Chiesa

to protect their assets and money from creditors, and that they did not disclose

these transfers, their beneficial ownership of the companies or that Westwood

Trustees was a valuable company for the same reason.

4.55.
In addition, neither Mr Chiesa nor Mrs Chiesa disclosed to the Trustee valuable

jewellery that Mrs Chiesa either owned or had disposed of in the previous five

years. In a June 2008 bank application, Mr and Mrs Chiesa had disclosed that

Mrs Chiesa owned jewellery with a total value of over £100,000. At an interview

with the Authority on 18 February 2015, Mrs Chiesa disclosed that she still

owned jewellery which, in the June 2008 bank application, they had valued at

over £50,000, including a £17,000 Cartier diamond watch and a £15,000

diamond ring, and informed the Authority that she had lost, given away, traded

in or sold the other items of jewellery.

4.56.
Further, neither Mr Chiesa nor Mrs Chiesa disclosed to the Trustee unidentified

valuable assets which Mr Chiesa had disclosed to a bank in December 2010 as

being owned by them. These assets included a £136,000 investment, which

was mentioned in the “Other Significant assets” section of the bank application

form. In June 2011, Mr Chiesa informed his bank that there had been no

material change in respect of the information he had provided in December

2010. Mr and Mrs Chiesa did not provide the Trustee with details of these

assets or of any disposal or loss of value of any such assets in the four months

prior to their sequestration, or respond to the Authority’s requirement that they

provide the Authority with details of the assets.

Mr and Mrs Chiesa’s misleading disclosures about a debt secured

against their properties

4.57.
Mr Chiesa disclosed to the Trustee that there were charges against two

properties he owned jointly with Mrs Chiesa, as security for a £991,000 debt

they owed to the off-shore trustee of the WIFAR Trust. However, Mr Chiesa

failed to explain the nature of the apparent debt and the charges against those

two properties and, by failing to challenge, correct or complete Mr Chiesa’s

disclosure, Mrs Chiesa acquiesced in his misleading of the Trustee.

4.58.
The Authority’s view is that, in reality, those loans were never intended to be

repaid during their lifetimes because, for the reasons explained at paragraph 4.8

above, Mr and Mrs Chiesa retained effective control over the WIFAR Trust

property at all times, and that Mrs Chiesa was aware of this. Had the loans

been repaid, Mr and Mrs Chiesa would have retained access to such funds.

4.59.
The two properties to which the charges applied were presented as having little

or no value to Mr and Mrs Chiesa due to the loan arrangement described in

paragraph 4.57 above. By placing charges against them in favour of the trustee

of the WIFAR Trust, Mr and Mrs Chiesa were acting to ensure that any future

realisable equity in those properties would be paid to the WIFAR Trust for their

use, rather than to their creditors. Such information was relevant to the

Trustee’s understanding of their financial circumstances and should have been

disclosed when the loans and charges were made known to the Trustee.

Misleading the Authority

4.60.
On 18 February 2015, as part of its investigation, the Authority conducted a

compelled interview with Mrs Chiesa during which she attempted to mislead the

Authority in relation to:

(1)
the extent of her capability and her knowledge and understanding of

Planners’ and Westwood Trustees’ business and financial arrangements;

and

(2)
her ownership of valuable jewellery.

Misleading statements to the Authority about her capability and her

knowledge and understanding of Planners’ and Westwood Trustees’

business and financial arrangements

4.61.
Mrs Chiesa attempted to mislead the Authority at interview by making

statements which were designed to give the Authority the impression that she

lacked capability and knowledge and understanding of the business and financial

arrangements of Planners or Westwood Trustees, including in relation to any off-

shore remuneration trusts, whereas in fact she understood and had an

important role in both businesses. She made statements which gave the false

impression that:

(1)
she had only had limited administrative involvement in those businesses;

and

(2)
she was reliant on Mr Chiesa to make her financial arrangements.

Limited administrative involvement in the business of Planners and Westwood

4.62.
Mrs Chiesa told the Authority that she had had a limited administrative role at

Planners and Westwood Trustees, which involved filing, making drinks for

clients, record keeping, preparing commission statements for advisers, and

making staffing decisions. She said she did not understand the workings of

trusts, did not know from which trust or trusts Mr Chiesa obtained loans, and

was specifically not aware of the WIFAR Trust or any company connected to it.

4.63.
In fact, Mrs Chiesa was aware of and had been actively involved in certain

fundamental business and financial arrangements at Planners and Westwood

Trustees, including in relation to trusts, and specifically the WIFAR Trust. In

particular, Mrs Chiesa:

(1) was a joint owner and, until August 2011, a director and secretary of

Westwood Trustees, and in those capacities was present at, and on at least

one occasion chaired, board meetings when resolutions were passed

effecting important actions such as changes of control and the termination

and appointment of directors;

(2) in those same capacities as a director, secretary and joint owner of

Westwood Trustees, prepared and executed financial documentation

without Mr Chiesa’s involvement, relating to banking applications and a

share issue that changed the control of Westwood Trustees;

(3) was a director and joint owner of a company incorporated by her and Mr

Chiesa for the purposes of another off-shore trust they had established, as

the umbrella trust for Westwood Trustees’ client remuneration trusts. In

her capacity as a director, Mrs Chiesa executed banking applications and

Companies House documentation in relation to this company, without Mr

Chiesa’s involvement, and was a signatory to its bank account;

(4) was a joint owner and, until August 2011, a director of the WIFAR Fiduciary

Management Company, which she and Mr Chiesa incorporated specifically

for the purpose of the WIFAR Trust, and in those capacities she prepared

and
executed
share
transfer
documentation
without
Mr
Chiesa’s

involvement; and

(5) was a director and joint owner with Mr Chiesa of at least one other

company incorporated by them for other business purposes, and in those

capacities executed banking applications, share transfers and Companies

House documentation without Mr Chiesa’s involvement.

4.64.
Further, Mrs Chiesa occupied a senior operational management role at Planners

and Westwood Trustees. In particular, she was:

(1) regarded by members of staff at Planners and Westwood Trustees who

carried out administrative work as the senior manager, from whom they

took direction;

(2) responsible for staffing decisions such as recruitment and pay;

(3) responsible for preparing commission statements and payment to Planners’

advisers, including those which she failed to pay, and which resulted in

Planners’, and her own, sequestration;

(4) a signatory to all of Planners’ and Westwood Trustees’ business accounts;

(5) consistently presented in Planners’ and Westwood Trustees’ marketing

material as a partner or managing director; and

(6) described in documentation drawn up by Mr and Mrs Chiesa’s legal

representatives in February 2012 to enable the directors of Westwood

Trustees to pay Mr and Mrs Chiesa’s legal costs as being of “fundamental

commercial importance” to Westwood Trustees (see paragraph 4.36

above).

Reliance on Mr Chiesa to make her financial arrangements

4.65.
Mrs Chiesa said she was reliant on Mr Chiesa to make her financial

arrangements, of which she was largely ignorant and did not take any active

involvement in, and that this included relying on him to prepare documentation

for her to sign, and which she did not seek to understand.

4.66.
In fact, Mrs Chiesa was aware of and was actively involved in her own financial

arrangements. In particular, Mrs Chiesa:

(1) in her capacities as a director and secretary of Westwood Trustees, was

present at the board meeting in March 2011 in which she and Mr Chiesa

resolved to issue 4,900 new shares in the company directly to the WIFAR

Fiduciary Management Company, which they owned and were the only

directors of. Mrs Chiesa, rather than Mr Chiesa, prepared the paperwork

for this change of control, which had the effect of transferring 98% of their

100% share in Westwood Trustees into the protection of that off-shore

company, which was incorporated by Mr and Mrs Chiesa specifically for the

purpose of the WIFAR Trust;

(2) was one of two signatories, with Mr Chiesa, on the UK bank account of the

WIFAR Fiduciary Management Company, through which she and Mr Chiesa

retained complete control of Planners’ profits once they had been paid over

to the WIFAR Trust. Mrs Chiesa received payments of £20,000 and

£45,000 from that off-shore company’s UK bank account, into her personal

bank account, with her name as the payment reference.

(3) authorised changes to the payment arrangements for valuable insurance

policies held by her and Mr Chiesa, and did so without Mr Chiesa’s

involvement;

(4) demonstrated at interview a sophisticated understanding of the technical

difference between the life assurance policies she and Mr Chiesa held;

(5) authorised payments out of her personal bank account to a Westwood

Trustees account, including payments totalling £166,000 on a single day;

and

(6) as shown at 4.63(1) to (5) above, and 4.66(1) and (3) above, prepared

and executed important financial and legal documents herself, without Mr

Chiesa’s involvement.

4.67.
In summary, Mrs Chiesa attempted to mislead the Authority about her capability

and her actual involvement in the businesses of Planners and Westwood

Trustees and her own financial arrangements, in an attempt to avoid

responsibility for the inaccurate, incomplete and/or misleading disclosures that

were made to the Trustee either by Mrs Chiesa or by Mr Chiesa on her behalf.

Misleading statement to the Authority about her ownership of valuable

jewellery

4.68.
Mrs Chiesa attempted to mislead the Authority at interview by stating that she

did not own any jewellery of substantial value at the time of her sequestration.

However, at the time of her interview Mrs Chiesa still owned jewellery which, in

June 2008, she and Mr Chiesa had stated to be worth over £50,000, including a

£17,000 Cartier diamond watch and a £15,000 diamond ring, which she knew

she had not disclosed to the Trustee.

5.
FAILINGS

5.1.
The regulatory provisions relevant to this Notice are referred to in Annex A.

5.2.
By reason of the facts and matters set out in this Notice, the Authority considers

that Mrs Chiesa is not a fit and proper person as she lacks integrity.

5.3.
Mrs Chiesa misled the Trustee in order to protect her and Mr Chiesa’s wealth

from the liabilities in Planners which, as partners in that firm, they were jointly

and severally liable for.

5.4.
Specifically, Mrs Chiesa acquiesced with Mr Chiesa’s misleading of the Trustee

by failing to challenge, correct or complete the account given by Mr Chiesa of

their financial circumstances at a meeting with the Trustee on 20 December

2011 and assisted Mr Chiesa in misleading the Trustee by signing forms at that

meeting which she must have known contained inaccurate, incomplete and/or

misleading information in respect of her financial circumstances. Mr Chiesa

misled the Trustee by making misleading disclosures, and/or failing adequately

to disclose the true position, in respect of their financial circumstances,

(1) the changes they had made to their ownership and control of Westwood

Trustees in order to protect their assets and money;

(2) the scale of the funds they were receiving directly from the successful non-

authorised business of Westwood Trustees;

(3) Westwood Trustees’ payment of significant personal expenses on their

behalf;

30

(4) the full extent of their high level of personal expenditure immediately

before and around the time of their sequestration;

(5) valuable assets that they still owned or had disposed of at an undervalue in

the previous five years; and

(6) their interest in any funds repaid under, and their control over, a £991,000

debt secured against two properties that they jointly owned.

5.5.
Further, Mrs Chiesa continued to acquiesce and assist with Mr Chiesa’s

misleading of the Trustee during their sequestration by failing to disclose

material information regarding their financial circumstances and by signing a

form which she must have known contained incorrect and misleading

information in respect of their financial circumstances. As a result, the Trustee

was misled in relation to:

(1) Mr and Mrs Chiesa’s access to significant funds from Westwood Trustees,

including via the WTR Trust;

(2) Westwood Trustees’ continuing payment of significant personal expenses

on their behalf;

(3) the very high level of their personal expenditure during their sequestration;

and

(4) Mrs Chiesa’s continued ownership of valuable jewellery that had not been

disclosed to the Trustee.

5.6.
Mr and Mrs Chiesa must have known that Planners would face significant

customer claims and regulatory action. They therefore, from November 2008,

started to take active steps to protect their assets and business interests from

potential claims. Whilst Mr and Mrs Chiesa made declarations to banks which

indicated that they had a high level of income and assets, and whilst they lived

a luxurious lifestyle, they made it appear to the Trustee that they had limited

income and expenditure and no net assets. Mrs Chiesa had the capability and

experience to understand the obvious disparity between her lifestyle, wealth and

expenditure and her status as a bankrupt unable to pay her creditors, and the

relevance that this would have to the Trustee during the period of her

sequestration.

5.7.
Mrs Chiesa was aware that the effect of the misleading and inadequate

disclosure of her and Mr Chiesa’s financial circumstances to the Trustee was to

increase the prospect that the steps that they had taken, both before and after

they were placed in sequestration, to protect their assets and money from

creditors’ claims would succeed. She failed to act with integrity in order to

preserve her and Mr Chiesa’s wealth.

5.8.
Save for £200 per month, Mrs Chiesa did not apply any of the wealth that Mr

Chiesa declared to one bank in 2011, and which she declared to another bank in

June 2013, towards paying any of her creditors. Instead, around £3.8 million of

Planners’ liability for over £5 million of customer claims in respect of mis-sales

of GTEPs was ultimately borne by the FSCS following Planners’ default.

5.9.
By reason of the facts and matters set out in this Notice, the Authority also

considers that Mrs Chiesa has breached Statement of Principle 4 of the

Statements of Principle because she attempted to mislead the Authority during

her compelled interview about:

(1) the extent of her capability and her knowledge and understanding of

Planners’ and Westwood Trustees’ business and financial arrangements, by

giving the false impression that she had only had limited administrative

involvement in those businesses and was reliant on Mr Chiesa to make her

financial arrangements. In fact, she was a senior manager at both firms,

and was aware of and actively involved in certain of their business and

financial arrangements. These arrangements related directly to her own

financial affairs, of which she had significantly greater knowledge and

understanding than she claimed at interview; and

(2) her ownership of valuable jewellery.

6.
SANCTIONS

6.1.
The Authority has decided to:

(1) impose a financial penalty on Mrs Chiesa for her failure to comply with

Statement of Principle 4; and

(2) withdraw her approval to perform the CF4 (Partner) controlled function and

impose an order prohibiting her from performing any function in relation to

any regulated activity carried on by an authorised person, exempt person

or exempt professional firm, by reason of her lack of fitness and propriety.

Financial penalty

6.2.
The principal purpose of a financial penalty is to promote high standards of

regulatory conduct by deterring persons who have committed breaches from

committing further breaches, helping to deter other persons from committing

similar breaches and demonstrating generally the benefits of compliant

behaviour.

6.3.
In determining whether a financial penalty is appropriate, the Authority is

required to consider all the relevant circumstances of a case. A financial penalty

is an appropriate sanction in this case, given the nature of the breach and the

need to send out a deterrent message.

6.4.
The Authority’s policy for imposing a financial penalty is set out in Chapter 6 of

DEPP. In respect of conduct occurring on or after 6 March 2010, the Authority

applies a five-step framework to determine the appropriate level of financial

penalty. DEPP 6.5B sets out the details of the five-step framework that applies

in respect of financial penalties imposed on individuals in non-market abuse

cases.

Step 1: disgorgement

6.5.
Pursuant to DEPP 6.5B.1G, at Step 1 the Authority seeks to deprive an individual

of the financial benefit derived directly from the breach where it is practicable to

quantify this.

6.6.
In this case, the Authority has not identified any financial benefit that Mrs

Chiesa derived directly from attempting to mislead the Authority in interview.

6.7.
The Step 1 figure is therefore nil.

Step 2: the seriousness of the breach

6.8.
Pursuant to DEPP 6.5B.2G, at Step 2 the Authority determines the figure that

reflects the seriousness of the breach. That figure is based on a percentage of

the individual’s relevant income. The individual’s relevant income is the gross

amount of all benefits received by the individual from the employment in

connection with which the breach occurred, and for the period of the breach.

6.9.
Mrs Chiesa obtained substantial sums, totalling at least £270,000, during the 12

months prior to the breach, from Westwood Trustees via her husband.

However, the Authority has not concluded that these sums constitute “relevant

income” as, due to the degree of obfuscation and complexity that Mrs Chiesa

has created around her financial circumstances, the Authority cannot be certain

whether Mrs Chiesa received this money in connection with any employment

with a regulated firm.

6.10.
The Step 2 figure is therefore nil. Nonetheless, the Authority has determined

the seriousness of Mrs Chiesa’s breaches to be level 4 for the purposes of Step 2

having taking into account:

(1) Mrs Chiesa attempted to mislead the Authority in an attempt to protect her

wealth, and so intended to financially benefit from the breach (DEPP

6.5B.2G(10)(b)); and

(2) the breach was committed deliberately (DEPP 6.5B.2G(12)(g)).

Step 3: mitigating and aggravating factors

6.11.
Pursuant to DEPP 6.5B.3G, at Step 3 the Authority may increase or decrease, by

way of a percentage adjustment, the amount of the financial penalty arrived at

after Step 2, but not including any amount to be disgorged as set out in Step 1,

to take into account factors which aggravate or mitigate the breach.

6.12.
As the Step 2 figure is nil, the Step 3 figure is also nil. Nonetheless, the

Authority considers that the following aggravating factor is relevant:

(1) Mrs Chiesa has a poor compliance history, being a partner in Planners

which received a £100,000 financial penalty from the Authority in

November 2013 for its failure to give suitable advice in relation to its GTEP

sales (DEPP 6.5B.3G(2)(i)).

Step 4: adjustment for deterrence

6.13.
Pursuant to DEPP 6.5B.4G, if the Authority considers the figure arrived at after

Step 3 is insufficient to deter the individual who committed the breach, or

others, from committing further or similar breaches, then the Authority may

increase the penalty.

6.14.
In this case, the Step 3 figure of £0 is not sufficient to deter Mrs Chiesa or

others from committing similar breaches.

6.15.
Mrs Chiesa’s attempt to mislead the Authority during her compelled interview is

serious. She clearly understood her duty to give truthful answers, and the

importance of doing so.

6.16.
In this particular case, having regard to:

(1) her wealth, and the financial gain that motivated her actions in attempting

to mislead the Authority;

(2) the seriousness of her misconduct, which the Authority has assessed at

Step 2 as level 4; and

(3) her poor compliance history, as mentioned at Step 3;

the Authority considers that a penalty of £50,000 is appropriate.

6.17.
The Step 4 figure is therefore £50,000.

Step 5: settlement discount

6.18.
No settlement discount applies. The penalty figure after Step 5 is therefore

£50,000.

6.19.
The Authority has therefore decided to impose a financial penalty of £50,000 on

Mrs Chiesa for breaching Statement of Principle 4.

Withdrawal of approval and prohibition

6.20.
The Authority has had regard to the guidance in Chapter 9 of EG and considers

it is appropriate and proportionate in all the circumstances to withdraw Mrs

Chiesa’s CF4 (Partner) controlled function at Planners and to prohibit Mrs Chiesa

from performing any function in relation to any regulated activity carried on by

an authorised person, exempt person or exempt professional firm, because she

is not a fit and proper person.

6.21.
The Authority considers that Mrs Chiesa is not a fit and proper person as she

lacks integrity. Further, she poses a risk to consumers and to confidence in the

financial system. First, because of the serious and prolonged nature of her

misleading of the Trustee, which began with her acquiescence and assistance

with Mr Chiesa’s misleading of the Trustee at the 20 December 2011 meeting

and which continued during her sequestration, in particular when she signed a

form in October 2012 which contained information about her financial position

which she must have known to be inaccurate. Secondly, because Mrs Chiesa

misled the Trustee in order to reduce the risk of having to make payments to

creditors, which she knew would include Planners’ former customers, which

demonstrates that she is willing to put her own interests above those of

consumers and regulated firms and individuals. Thirdly, because Mrs Chiesa has

close ties to the regulated community due to her continued connection to

Westwood Trustees, which has a network of introducers including approximately

30 approved persons. The Authority considers there is a significant risk that Mrs

Chiesa’s involvement with Westwood Trustees and those approved persons

could continue and/or increase in future. Fourthly, because of the misleading

statements which Mrs Chiesa made to the Authority during her compelled

interview.

6.22.
In the circumstances, the Authority considers that it is appropriate and

proportionate to prohibit Mrs Chiesa from performing any function in relation to

any regulated activity carried on by an authorised person, exempt person or

exempt professional firm.

6.23.
These sanctions support the Authority’s operational objectives of securing an

appropriate degree of protection for consumers and protecting and enhancing

the integrity of the UK financial system.

7.
PROCEDURAL MATTERS

Decision maker

7.1.
The decision which gave rise to the obligation to give this Final Notice was made

by the Settlement Decision Makers.

7.2.
This Final Notice is given under, and in accordance with, section 390 of the Act.

Manner of and time for Payment

7.3.
The financial penalty must be paid in full by Mrs Chiesa to the Authority by no

later than 26 October 2017, 14 days from the date of the Final Notice.

36

If the financial penalty is not paid

7.4.
If all or any of the financial penalty is outstanding on 26 October 2017, the

Authority may recover the outstanding amount as a debt owed by Mrs Chiesa

and due to the Authority.

7.5.
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 these

provisions, the Authority must publish such information about the matter to

which this notice relates as the Authority considers appropriate. The information

may be published in such manner as the Authority considers appropriate.

However, the Authority may not publish information if such publication would, in

the opinion of the Authority, be unfair to you or prejudicial to the interests of

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

7.6.
The Authority intends to publish such information about the matter to which this

Final Notice relates as it considers appropriate.

Contacts

7.7.
For more information concerning this matter generally, contact Rachel West of the

Enforcement and Market Oversight Division of the Authority (direct line: 020 7066

0142).

Financial Conduct Authority, Enforcement and Market Oversight Division

ANNEX A

RELEVANT STATUTORY PROVISIONS

1.
Section 56 of the Act provides that the Authority may make an order prohibiting an

individual from performing a specified function, any function falling within a

specified description or any function, if it appears to the Authority that that

individual is not a fit and proper person to perform functions in relation to a

regulated activity carried on by an authorised person, exempt person or a person

to whom, as a result of Part 20, the general prohibition does not apply in relation

to that activity. Such an order may relate to a specified regulated activity, any

regulated activity falling within a specified description, or all regulated activities.

2.
The Authority has the power, pursuant to section 63 of the Act, to withdraw an

approval given under section 59 of the Act – to perform the CF4 (Partner)

controlled function - if it considers that the person is not a fit and proper person to

perform the function.

3.
Section 66 of the Act provides that the Authority may take action against a person

(whether or not it has given its approval in relation to the person) if it appears to

the Authority that they are guilty of misconduct and the Authority is satisfied that it

is appropriate in all the circumstances to take action against them. Misconduct

includes failure, while an approved person, to comply with a Statement of Principle.

The action that may be taken by the Authority pursuant to section 66 of the Act

includes the imposition of a penalty on the approved person of such amount as it

considers appropriate.

RELEVANT HANDBOOK PROVISIONS

4.
The FIT and EG handbook provisions set out below are the versions in force at the

date of this Notice. The APER and DEPP handbook provisions set out below are the

versions that were in force on 18 February 2015 (i.e. the date of Mrs Chiesa’s

interview with the Authority).

Fit and Proper Test for Approved Persons (FIT)

5.
FIT sets out the Fit and Proper test for Approved Persons. The purpose of FIT is to

outline the main criteria for assessing the fitness and propriety of a candidate for a

controlled function. FIT is also relevant in assessing the continuing fitness and

propriety of an approved person.

38

6.
FIT 1.3 provides that the Authority will have regard to a number of factors when

assessing the fitness and propriety of a person. The most important considerations

will be the person’s honesty, integrity and reputation, competence and capability,

and financial soundness.

7.
FIT 2.1.1G provides that in determining a person’s honesty and integrity the

Authority will have regard to all relevant matters.

Statements of Principle and Code of Practice for Approved Persons (APER)

8.
APER sets out the fundamental obligations of approved persons and sets out

descriptions of conduct, which, in the opinion of the Authority, does not comply

with the relevant Statements of Principle. It also sets out, in certain cases, factors

to be taken into account in determining whether an approved person’s conduct

complies with a Statement of Principle.

9.
APER 2.1A.3P sets out Statement of Principle 4. This states that an approved

person must deal with the Authority and other regulators in an open and

cooperative way and must disclose appropriately any information of which the

Authority would reasonably expect notice.

10.
APER 3.1.3G provides that, when establishing compliance with, or a breach of, a

Statement of Principle, account will be taken of the context in which a course of

conduct was undertaken, including the precise circumstances of the individual case,

the characteristics of the particular controlled function and the behaviour expected

in that function.

11.
APER 3.1.4G provides that an approved person will only be in breach of a

Statement of Principle if they are personally culpable; that is, where their conduct

was deliberate or where their standard of conduct was below that which would be

reasonable in all the circumstances.

12.
APER 4.4 sets out examples of behaviour which the Authority considers does not

comply with Statement of Principle 4. An example of such conduct is failing without

good reason to inform the Authority of information of which the approved person

was aware, in response to questions from the Authority (APER 4.4.9E).

The Authority’s policy on the imposition of financial penalties

13.
The Authority's policy in relation to the imposition of financial penalties is set out in

Chapter 6 of DEPP which forms part of the Handbook.

14.
DEPP 6.1.2G provides that the principal purpose of imposing a financial penalty is

to promote high standards of regulatory and/or market conduct by deterring

persons who have committed breaches from committing further breaches, helping

to deter other persons from committing similar breaches, and demonstrating

generally the benefits of compliant behaviour.

15.
The Authority will consider the full circumstances of each case when determining

whether or not to impose a financial penalty. DEPP 6.2.1G sets out a non-

exhaustive list of factors that may be of relevance in determining whether to

impose a financial penalty, which include the following:-

(1)
DEPP 6.2.1G(1): The nature, seriousness and impact of the suspected

breach, including whether the breach was deliberate or reckless, the

duration and frequency of the breach, the amount of any benefit gained or

loss avoided as a result of the breach, the loss or risk of loss caused to

consumers or other market users, and the nature and extent of any

financial crime facilitated, occasioned or otherwise attributable to the

breach;

(2)
DEPP 6.2.1G(2): The conduct of the person after the breach, including how

quickly, effectively and completely the person brought the breach to the

attention of the Authority or another relevant regulatory authority, the

degree of co-operation the person showed during the investigation of the

breach, any remedial steps the person has taken in respect of the breach,

the likelihood that the same type of breach (whether on the part of the

person under investigation or others) will recur if no action is taken, and

the nature and extent of any false or inaccurate information given by the

person and whether the information appears to have been given in an

attempt to knowingly mislead the Authority; and

(3)
DEPP 6.2.1G(5): Action taken by the Authority in previous similar cases.

16.
DEPP 6.5.1G(1) provides that the Authority will consider all the relevant

circumstances of a case when it determines the level of financial penalty (if any)

that is appropriate and in proportion to the breach concerned.

17.
DEPP 6.5B sets out the five steps for calculation of financial penalties to be

imposed on individuals.

The Authority’s policy for exercising its powers to make prohibition orders and

to withdraw approvals

18.
EG 9.1.1G provides that the Authority’s power under section 56 of the Act to

prohibit individuals who are not fit and proper from carrying out functions in

relation to regulated activities helps the Authority to work towards achieving its

regulatory objectives. The Authority may exercise this power to make a prohibition

order where it considers that, to achieve any of those objectives, it is appropriate

either to prevent an individual from performing any functions in relation to

regulated activities, or to restrict the functions which he may perform.

19.
EG 9.1.2G provides that the Authority’s effective use of the power under section 63

of the Act to withdraw approval from an approved person will also help ensure high

standards of regulatory conduct by preventing an approved person from continuing

to perform the controlled function to which the approval relates if he is not a fit and

proper person to perform that function. Where it considers this is appropriate, the

Authority may prohibit an approved person, in addition to withdrawing their

approval.

20.
EG 9.2.2G sets out the general scope of the Authority’s powers in respect of

prohibition orders, which include the power to make a range of prohibition orders

depending on the circumstances of each case and the range of regulated activities

to which the individual’s lack of fitness and propriety is relevant.

21.
EG 9.2.3G provides that the scope of a prohibition order will depend on the range

of functions that the individual performs in relation to regulated activities, the

reasons why he is not fit and proper, and the severity of risk which he poses to

consumers or the market generally.

22.
EG 9.3.2G provides that, when deciding whether to make a prohibition order

against an approved person and/or withdraw its approval, the Authority will

consider all the relevant circumstances of the case which may include, but are not

limited to, the following factors (among others):

(1)
whether the individual is fit and proper to perform functions in relation to

regulated activities. The criteria for assessing the fitness and propriety of

an approved person are contained in FIT 2.1 (Honesty, integrity and

reputation), FIT 2.2 (Competence and capability) and FIT 2.3 (Financial

soundness);

(2)
whether, and to what extent the approved person has failed to comply

with the Statements of Principle;

(3)
the relevance and materiality of any matters indicating unfitness;

(4)
the length of time since the occurrence of any matters indicating

unfitness;

(5)
the particular controlled function the approved person is (or was)

performing, the nature and activities of the firm concerned and the

markets in which he operates;

(6)
the severity of the risk which the individual poses to consumers and to

confidence in the financial system; and

(7)
the previous disciplinary record and general compliance history of the

individual.

23.
EG 9.7.1G provides that in appropriate cases the Authority may take other action

against an individual in addition to making a prohibition order including the use of

its power to impose a financial penalty.