Final Notice
On , the Financial Conduct Authority issued a Final Notice to David Nicholas King
FINAL NOTICE
1.
ACTION
1.1
For the reasons given in this Final Notice, the Authority has decided to refuse an
application by Mr David Nicholas King to vary the Prohibition Order imposed on him on
22 July 2021.
1.2
The Authority gave Mr King a Decision Notice on 13 March 2023, which notified Mr King
of the above decision in relation to his Application.
1.3
Mr King has not referred the matter to the Tribunal within 28 days of the date on which
the Decision Notice was given to him.
1.4
Accordingly, the Authority hereby refuses the Application by Mr King to vary the
Prohibition Order imposed on him.
2.
SUMMARY OF REASONS
2.1
On 22 July 2021, the Authority issued the 2021 Final Notice which imposed the Prohibition
Order on Mr King. The Prohibition Order prohibited Mr King from performing any function
in relation to any regulated activity carried on by any authorised person, exempt person
or exempt professional firm.
2.2
The Prohibition Order was imposed on Mr King after he had been convicted in October
2019 of three counts of theft, one count of fraud by false representation and one count
of acquiring/using/possessing criminal property. The Authority concluded that these
convictions demonstrate that Mr King is not a fit and proper person to perform functions
in relation to regulated activities, and that it was therefore appropriate to impose the
Prohibition Order.
2.3
On 1 February 2022, Mr King submitted an application (“the Application”) for the variation
of the Prohibition Order under section 56(7) of the Act so as to permit him to carry on
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the regulated activity of “assisting in the administration and performance of a contract of
insurance”. Mr King stated in the Application that the variation was necessary to progress
an application for employment with a specific rural chartered surveying firm (“the
Prospective Employer”). Mr King has subsequently provided further information
concerning the possibility of his pursuing a paid summer internship with a national
property adviser (“the Prospective Internship”), as well as completing the RICS
qualification while working for a private landlord (“the Prospective Private Landlord
Employment”) who undertakes its own in-house estate management activities
2.4
Having considered all the relevant circumstances of the case, the Authority has decided
to refuse the Application for the following reasons:
i)
Mr King engaged in criminal activity over a prolonged period (2010 – 2017), when
he stole, or obtained by fraud, around £608,000 from family members and a
friend. In so doing, Mr King demonstrated a clear and serious lack of honesty and
integrity.
ii)
On 21 November 2019, Mr King was sentenced to a total term of six years and
four months’ imprisonment. Mr King was released from prison on 19 January 2023
and is serving the remainder of his custodial sentence in the community on licence.
Mr King has therefore had insufficient opportunity to demonstrate that he has
remedied the Authority’s concerns over his honesty and integrity. He has not been
in situations in which the same or similar opportunities for reoffending could occur,
because of the restrictions and limitations in place. Accordingly, the Authority
considers that the Application is premature.
iii)
Mr King has provided insufficient evidence of the roles he hopes to pursue at the
Prospective Employer, Prospective Internship or Prospective Private Landlord
Employment, and the safeguards that would be in place were he to secure
employment. Moreover, it is not apparent that a variation of the Prohibition Order
is necessary for Mr King to pursue his chosen profession in rural chartered
surveying.
2.5
Accordingly, the Authority is not satisfied that the unfitness which gave rise to the
Prohibition Order has been remedied, and that, were the Prohibition Order to be varied,
this would not result in a reoccurrence of the risk to consumers and/or to the integrity of
the UK financial system that resulted in the Prohibition Order being made; nor that Mr
King is now fit and proper to perform functions in relation to regulated activities.
3.
DEFINITIONS
3.1
The definitions below are used in this Final Notice:
“the 2020 Warning Notice”; means the warning notice given to Mr King dated 17
December 2020;
“the 2021 Decision Notice” means the decision notice given to Mr King dated 13 May
2021;
“the 2021 Final Notice” means the final notice given to Mr King dated 22 July 2021;
“the Act” means the Financial Services and Markets Act 2000;
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“the Application” means the application made by Mr King on 1 February 2022 to vary the
Prohibition Order;
“the Authority” means the Financial Conduct Authority;
“the Decision Notice” means the decision notice given to Mr King dated 13 March 2023;
“EG” means the Authority’s Enforcement Guide;
“FIT” means the ‘Fit and Proper Test for Employees and Senior Personnel’, forming part
of the Handbook;
“the Handbook” means the Authority’s Handbook of Rules and Guidance;
“the Prohibition Order” means the prohibition order imposed on Mr King on 22 July 2021;
“the Prospective Employer” has the meaning set out in paragraph 2.3 of this Final Notice;
“the Prospective Internship” has the meaning set out in paragraph 2.3 of this Final Notice;
“the Prospective Private Landlord Employment” has the meaning set out in paragraph 2.3
of this Final Notice;
“RDC” means the Regulatory Decisions Committee of the Authority (see further at
paragraph 7.3 below);
“RICS” means the Royal Institution of Chartered Surveyors;
“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber); and
“the Warning Notice” means the warning notice given to Mr King dated 7 December 2022.
4.
FACTS AND MATTERS
4.1
Whilst an employee of, and an approved person at, authorised firms, Mr King engaged in
the following criminal offences:
4.1.1 three counts of theft, contrary to sections 1(1) and 7 of the Theft Act 1968;
4.1.2 one count of fraud by false representation, contrary to sections 1 and 2 of the
Fraud Act 2006; and
4.1.3 one count of acquiring, using and possessing criminal property, contrary to
sections 329(1) and 334 of the Proceeds of Crime Act 2002.
4.2
These offences occurred from 1 February 2010 to 31 December 2017 and the total
amount stolen, or obtained by fraud, from the victims was in the region of £608,000.
4.3
Mr King committed fraud on his family members by taking their share of his grandparents’
estate which they had inherited, amounting to approximately £573,000, and using it to
fund his own lifestyle. Mr King committed an additional fraud against a friend when he
personally guaranteed bridging finance on a property purchase, intending to make a gain
of £35,000 for himself.
4.4
On 3 October 2019, Mr King pleaded guilty to and was convicted of the above offences
at Sheffield Magistrates Court.
4.5
On 21 November 2019, Mr King was sentenced at Sheffield Crown Court to a total term
of six years and four months’ imprisonment.
4.6
At the sentencing hearing, the judge made the following observations:
4.6.1 Mr King “connived and contrived” to hide his dishonesty; he “forged documents”;
and he “lied to family and friends and repeated those lies time and… time again…”;
4.6.2 Mr King’s behaviour was “utterly selfish” and he “did not have a care in the world
for the impact and psychological harm” that he had caused others;
4.6.3 as regards the degree of trust breached by Mr King, it was “…beyond high; if it’s
not trust, it’s responsibility”;
4.6.4 in respect of count 1, which related to Mr King stealing over £500,000 from the
estate of his grandmother, there “was almost every imaginable aggravating
feature”; and
4.6.5 although Mr King had returned £305,000 of the money he had taken, it was only
returned because he was “caught out”.
4.7
By reason of the above facts and matters, the Authority considered that Mr King lacked
honesty and integrity and posed a serious risk to consumers, financial institutions and to
confidence in the market generally, and that he was not a fit and proper person to perform
functions in relation to regulated activities and so should be prohibited from performing
such functions. Following the issue of the 2020 Warning Notice on 17 December 2020,
Mr King made representations as to why the Prohibition Order should not be imposed (as
set out in Annex B of the 2021 Final Notice). Having taken these into account, on 13 May
2021, the Authority issued the 2021 Decision Notice. Mr King did not exercise his right to
refer the matter to the Tribunal and therefore, on 22 July 2021, the Authority made the
Prohibition Order against Mr King and issued the 2021 Final Notice notifying him of this.
The Application
4.8
On 1 February 2022, Mr King applied to vary the Prohibition Order to permit him to carry
on the regulated activity of “assisting in the administration and performance of a contract
of insurance”.
4.9
Mr King explained in the Application that the fact that the Prohibition Order does not
permit him to carry on that activity impedes his ability to obtain employment as a rural
chartered surveyor at the Prospective Employer, which engages in regulated insurance
activities.
4.10
The key grounds cited by Mr King in support of the Application are, in summary, as
follows:
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4.10.1 the variation is necessary to progress an application for employment with the
Prospective Employer;
4.10.2 he has taken full accountability for the offences committed and there has been
no repeat offending;
4.10.3 his offences were not committed while undertaking the regulated activity in
respect of which he now seeks a variation;
4.10.4 he has been sufficiently rehabilitated and no longer poses a risk to consumers
and confidence in the UK financial system, as evidenced by: (i) his enrolment in
a charitable outreach programme; and (ii) character references which he has
provided;
4.10.5 any risk he continues to pose will be mitigated by the checks and safeguards in
place at the Prospective Employer;
4.10.6 he will only be “assisting a Director level partner” in relation to insurance related
work for the initial two year training period at the Prospective Employer, and he
does not anticipate he would carry out this activity on his own account until a
further three years thereafter;
4.10.7 he is under no financial duress which may lead to re-offending;
4.10.8 following his release from prison in January 2023, he will serve the remainder of
his sentence under licence until March 2026, and during this time he can be
recalled to prison for suspected offending;
4.10.9 the Application is to vary the Prohibition Order in a limited respect rather than for
wholesale revocation; and
4.10.10 he is willing for any variation to the Prohibition Order to be “tied” to the regulated
work of a particular firm, such as the Prospective Employer.
4.11
Mr King was released from prison on 19 January 2023 and is now serving the remainder
of his custodial sentence in the community on licence. Mr King has since informed the
Authority that the variation is also necessary for him to be able to pursue the Prospective
Internship, and that he wishes to be able to complete his RICS qualification through the
Prospective Private Landlord Employment.
5.
LACK OF FITNESS AND PROPRIETY
5.1
The statutory and regulatory provisions relevant to this Notice are set out in detail in
Annex A.
5.2
Having considered all the relevant circumstances and having regard to the provisions of
EG 9.6.1, the Authority has decided to refuse the Application for the following reasons.
5.3
The nature and circumstances of Mr King’s offending demonstrate a serious and clear lack
of honesty and integrity:
5.3.1 he committed the offences against family members and a friend, thereby
abusing the position of trust he held;
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5.3.2 certain of his offences involved him taking advantage of vulnerable victims;
5.3.3 he committed multiple offences over a prolonged period (1 February 2010 to 31
December 2017);
5.3.4 he obtained a substantial economic benefit from his offences (although he has
since repaid £305,000 of such benefit to the victims); and
5.3.5 the sentencing judge was particularly critical of his behaviour.
5.4
Although Mr King says he has accepted full responsibility for his offending, as well as
progressed with his rehabilitation, in the Authority’s view the Application is premature
for the following reasons:
5.4.1 Approximately three and a half years have passed since Mr King was convicted
(on 3 October 2019) and just under two years since the Prohibition Order was
imposed (on 22 July 2021). While the Authority does not specify a minimum
period after which it will consider an application for variation or revocation of a
prohibition order, the passage of time is relevant insofar as it allows an individual
to rehabilitate and to demonstrate this. The Authority is not satisfied that Mr King
has had sufficient time and opportunity to rehabilitate. Mr King has only recently
been released from prison and is serving the remainder of his sentence in the
community on licence; he acknowledges that the probation order to which he is
subject acts as a serious deterrent to repeat offending. Mr King has thus far been
unable to provide sufficient evidence of having been in a role which gives rise to
relevant opportunities for re-offending. The Authority is of the view that until he
has served his sentence in full and re-entered society without restriction, his
honesty and integrity cannot be properly tested.
5.4.2 Insufficient evidence has been provided by Mr King for the Authority to conclude
that he has been rehabilitated. The Authority acknowledges that character
references written by family members show that Mr King has sought to rebuild
relationships with the victims of his offending. However, neither they, nor the
other testimonials submitted by Mr King, provide evidence of his conduct in
situations where he was exposed to relevant opportunities for re-offending.
5.5
In the circumstances, the Authority is not satisfied that the unfitness which gave rise
to the Prohibition Order has been remedied and will not occur again.
5.6
Further, a number of statements by Mr King in respect of the roles he is pursuing at
the Prospective Employer, the Prospective Internship and the Prospective Private
Landlord Employment are not supported by any documentary evidence. For example,
Mr King says that the contracts of insurance he would be dealing with at the
Prospective Employer are “considerably low risk” to the public and the UK financial
system, and that his involvement with them would be limited. However, Mr King has
been unable to provide the Authority with full details of what the role he hopes to
obtain at the Prospective Employer would entail, the types of contracts of insurance he
would be dealing with and the activities he would be carrying out in respect of these.
Mr King has also been unable to provide the Authority with evidence of the Prospective
Employer’s checks and safeguards against any future risk as the Prospective Employer
has not shared this information with him. As Mr King’s applications for the Prospective
Internship and the Prospective Private Landlord Employment are in their early stages,
Mr King has also been unable to provide the Authority with any documentary
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evidence demonstrating the precise nature of the roles and responsibilities involved, to
enable it to be satisfied that the Prohibition Order should be varied. Accordingly, the
Authority has been provided with insufficient evidence and information to determine
whether the roles are sufficiently limited to mitigate adequately the risk Mr King poses
to consumers and the integrity of the UK financial system.
5.7
Mr King has further stated that, as the Prospective Employer does not carry on
investment business, there is no risk of a reoccurrence of the risks to the public
related to his previous offending. However, insurance related work may in certain
circumstances give rise to opportunities for re-offending and misconduct, such as
(among other things) misappropriating client money, failing to pass on claim proceeds
in full and non-disclosure of commission.
5.8
To allay the Authority’s concerns, Mr King has suggested that the proposed variation
could be “tied” to the regulated insurance work of a particular firm, such as the
Prospective Employer. However, without evidence of the specific measures and
controls in place at the Prospective Employer, which has told Mr King that it does not
wish to divulge details of its internal procedures, the Authority cannot assess in its
consideration of the Application whether there are sufficient safeguards to eliminate
the risk that Mr King poses.
5.9
The Authority has also had regard to Mr King’s financial position. Mr King has a history
of failing to manage his financial affairs soundly, resulting in his bankruptcy in October
2019. Although he has since been discharged from bankruptcy, the Authority notes
that the Insolvency Service has imposed additional bankruptcy restrictions for a period
of 12 years following discharge (i.e. until October 2032), and Mr King is not in current
employment. The Authority therefore considers Mr King’s current financial position to
be uncertain.
5.10
The Authority accepts that the Prohibition Order may have adverse effects on Mr
King’s career advancement but considers that this is not disproportionate when
weighed against the harm that the Prohibition Order is intended to avoid.
5.11
In this regard, the Authority notes that Mr King has not yet been provided with an
offer of employment from the Prospective Employer, nor confirmation of his place at
either the Prospective Internship or of the Prospective Private Landlord Employment,
and from the evidence provided by Mr King it does not appear that such an offer from
the Prospective Employer will necessarily be forthcoming if the Prohibition Order is
varied.
5.12
It is also not apparent that a variation of the Prohibition Order is necessary for Mr King
to pursue his chosen profession in rural chartered surveying, as there may be other
employers in the industry who have no concurrent insurance business. Mr King has
provided no evidence or information in this respect. Nor does it appear to the Authority
from the materials provided by Mr King that engaging in insurance-related work is a
pre-requisite for qualifying as a RICS rural chartered surveyor.
5.13
Having regard to the provisions in EG 9.6, and for the reasons set out in paragraphs 5.3
to 5.12 above:
5.13.1 The Authority is not satisfied that Mr King no longer poses a risk to consumers,
or to the integrity of the UK financial system, particularly in view of the absence of
sufficient evidence of rehabilitation.
5.13.2 The Authority is not satisfied that, were the Prohibition Order to be varied, this
would not result in a reoccurrence of the risks to consumers and to the integrity
of the UK financial system, that resulted in the Prohibition Order being made.
5.13.3 The Authority is not satisfied that Mr King is a fit and proper person to perform
any functions in relation to regulated activities by reference to the criteria in FIT,
specifically FIT 2.1 (honesty, integrity and reputation) and FIT 2.3 (financial
soundness).
5.13.4 The Authority is satisfied that it is not disproportionate to refuse the Application
to vary the Prohibition Order in the terms sought, as the negative impact on Mr
King’s career prospects is outweighed by the need to protect against the ongoing
risks he represents to consumers and to the integrity of the UK financial system.
6.
REPRESENTATIONS
6.1
Annex B contains a brief summary of the key representations made by Mr King and how
they have been dealt with. In making the decision which gave rise to the obligation to
give this Final Notice, the Authority has taken into account all the representations made
by Mr King, whether or not set out in Annex B.
7.
PROCEDURAL MATTERS
7.1
This Final Notice is given to Mr King under, and in accordance with, Section 390(1) of the
Act.
7.2
The following paragraphs are important.
Decision Maker
7.3
The decision which gave rise to the obligation to give this Final Notice was made by the
RDC. The RDC is a committee of the Authority which takes certain decisions on behalf of
the Authority. The members of the RDC are separate to the Authority staff involved in
conducting investigations and recommending action against firms and individuals. Further
information about the RDC can be found on the Authority’s website:
7.4
Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of information
about the matter to which this Final Notice relates. Under those provisions, the Authority
must publish such information about the matter to which this Final Notice relates as the
Authority considers appropriate.
7.5
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 Mr King or prejudicial to the interests of the
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.
Authority Contacts
7.7
For more information concerning this matter generally, contact Shehraz Hussain at the
Authority (direct line: 020 7066 8006/email: shehraz.hussain@fca.org.uk).
Threshold Conditions Team Manager
Financial Conduct Authority, Enforcement and Market Oversight
ANNEX A
RELEVANT STATUTORY AND REGULATORY PROVISIONS
1.
The Authority’s operational objectives are set out in section 1B(3) of the Act and include
securing an appropriate degree of protection for consumers (section 1C of the Act) and
protecting and enhancing the integrity of the UK financial system (section 1D of the Act).
2.
Section 56(7) of the Act states that the Authority may, on the application of the individual
named in a prohibition order made by it, vary or revoke it.
3.
Section 58 of the Act sets out the procedure for granting or refusing an application for
variation or revocation of a prohibition order.
4.
In considering whether to grant or refuse an application for the variation or revocation of
a prohibition order, the Authority must have regard to relevant provisions in the
Handbook. The main provisions that the Authority considers to be relevant to this case
are set out below.
The Enforcement Guide
5.
The Authority’s approach to exercising its power to grant or refuse an application for the
variation or revocation of a prohibition order is set out in Chapter 9.6 of EG.
6.
EG 9.6.1 provides that, when considering whether to grant or refuse an
application to revoke or vary a prohibition order, the Authority will consider all the
relevant circumstances of a case. These may include, but are not limited to, the following:
(1)
the seriousness of the misconduct or other unfitness that resulted in the order;
(2)
the amount of time since the original order was made;
(3)
any steps taken subsequently by the individual to remedy the misconduct or other
unfitness;
(4)
any evidence which, had it been known to the Authority at the time, would have
been relevant to the Authority’s decision to make the prohibition order;
(5)
all available information relating to the individual’s honesty, integrity or
competence since the order was made, including any repetition of the misconduct
which resulted in the prohibition order being made;
(6)
where the Authority’s finding of unfitness arose from incompetence rather than
from dishonesty or lack of integrity, evidence that this unfitness has been or will
be remedied; for example, this may be achieved by the satisfactory completion of
relevant training and obtaining relevant qualifications, or by supervision of the
individual by his employer;
(7)
the financial soundness of the individual concerned; and
(8)
whether the individual will continue to pose the level of risk to consumers or
confidence in the financial system which resulted in the original prohibition if it is
lifted.
7.
EG 9.6.3 provides that if the individual applying for a revocation or variation of a
prohibition order proposes to take up an offer of employment to perform a controlled
function, the Authority will take this into account when considering whether to grant or
refuse the application.
8.
EG 9.6.4 provides that the Authority will not generally grant an application to vary or
revoke a prohibition order unless it is satisfied that: the proposed variation will not result
in a reoccurrence of the risk to consumers or confidence in the financial system that
resulted in the order being made; and the individual is fit to perform functions in relation
to regulated activities generally, or to those specific regulated activities in relation to
which the individual has been prohibited. The Authority will assess the individual's fitness
and propriety to perform these functions on the basis of the criteria in FIT 2.1 (Honesty,
integrity and reputation), FIT 2.2 (Competence and capability) and FIT 2.3 (Financial
soundness).
The Fit and Proper test for Employees and Senior Personnel sourcebook (FIT)
9.
FIT sets out the criteria that the Authority will consider when assessing the fitness and
propriety of a candidate for a controlled function, and may consider when assessing the
continuing fitness and propriety of approved persons (FIT 1.1.2G(2).
10.
The main assessment criteria to which the Authority will have regard when assessing the
fitness and propriety of a person to perform a particular controlled function are described
in FIT 2, by reference to: honesty, integrity and reputation (FIT 2.1); competence and
capability (FIT 2.2); and financial soundness (FIT 2.3).
11.
FIT 2.1.1 G provides that in determining a person’s honesty, integrity and reputation, the
Authority will have regard to all relevant matters including, but not limited to, those set
out in FIT 2.1.3 G.
12.
In relation to convictions for criminal offences, FIT 2.1.1A G states that: If any staff being
assessed under FIT has a conviction for a criminal offence, the firm should consider the
seriousness of and circumstances surrounding the offence, the explanation offered by
that person, the relevance of the offence to the proposed role, the passage of time since
the offence was committed and evidence of the individual’s rehabilitation.
13.
FIT 2.1.3 G provides a non-exhaustive list of matters to which the Authority will have
regard when determining a person’s honesty, integrity and reputation. These include:
(1)
whether the person has been convicted of any criminal offence; this must include,
where provided for by the Rehabilitation Exceptions Orders to the Rehabilitation
of Offenders Act 1974 or the Rehabilitation of Offenders (Northern Ireland) Order
1978 (as applicable), any spent convictions; particular consideration will be given
to offences of dishonesty, fraud, financial crime or an offence under legislation
relating to companies, building societies, industrial and provident societies, credit
unions, friendly societies, banking, other financial services, insolvency, consumer
credit companies, insurance, consumer protection, money laundering, market
manipulation and insider dealing, whether or not in the United Kingdom;
14.
FIT 2.3.1 G provides a non-exhaustive list of factors to which the Authority will have
regard when determining a person’s financial soundness. These include:
(1)
whether, in the United Kingdom or elsewhere, the person has made any
arrangements with their creditors, filed for bankruptcy, had a bankruptcy petition
served on them, been adjudged bankrupt, been the subject of a bankruptcy
restrictions order (including an interim bankruptcy restrictions order), offered a
bankruptcy restrictions undertaking, had assets sequestrated, or been involved in
proceedings relating to any of these.
ANNEX B
REPRESENTATIONS
1.
A summary of the key representations made by Mr King, and the Authority’s
conclusions in respect of them (in bold), is set out below.
The Application is not premature
2.
The Application is not premature as it was sought with a view to securing a role at the
Prospective Employer. Any graduate employment secured at the Prospective Employer
would only commence in September 2023, some 9 months after Mr King’s release from
prison. However, Mr King has been unable to proceed with a summer internship or a
graduate placement with the Prospective Employer due to there being no variation to the
Prohibition Order in time.
3.
Mr King is also pursuing a paid, month-long, Prospective Internship with a national
property adviser; should that internship be unsuccessful, then Mr King would apply for
their Winter 2023 graduate scheme intake, with employment to commence in September
2024.
4.
The Application should not be refused on the basis that Mr King has not been placed in a
position of trust with responsibility for monies since his conviction. As the Prohibition
Order prevents Mr King from undertaking regulated functions, it is unrealistic to expect
Mr King to have gained this experience prior to making the Application.
5.
In order to be satisfied that it is appropriate to vary the Prohibition Order, the
Authority needs to be satisfied that Mr King no longer poses a risk to consumers
or to the integrity of the UK financial system. The burden of proving that he is
fit and proper lies with Mr King. The Authority considers that strong and
compelling evidence that Mr King no longer poses a risk is needed in order to
grant a variation of the Prohibition Order, in circumstances where Mr King is
serving the remainder of his custodial sentence in the community on licence, as
the temptation to re-offend may be outweighed by the threat of a return to
prison. Mr King has not provided such evidence, and in light of his recent release
from prison is not yet in a position to do so.
6.
The Authority recognises that Mr King has made the Application to assist with
his employment applications, but considers that the negative impact on his
career prospects is outweighed by the need to protect against the ongoing risks
he presents to consumers and to the integrity of the UK financial system. As Mr
King has not yet been able to demonstrate that he has remedied the Authority’s
concerns regarding his honesty and integrity, the Authority remains of the view
that the Application is premature.
7.
Mr King’s Prospective Internship and Prospective Private Landlord Employment
indicate that his prospects of employment are not wholly contingent on varying
the Prohibition Order. It may therefore be possible for him to gain experience
in his chosen sector, where his honesty and integrity will be tested in roles
where there are opportunities for re-offending. It is also open for Mr King to
consider roles outside that sector, which do not require a variation of the
Prohibition Order, that would enable him to demonstrate his honesty and
integrity.
The variation is needed for Mr King to complete his RICS rural professional qualification
8.
The variation of the Prohibition Order is needed so that Mr King can undertake the
insurance work (as stipulated under the Designated Professional Body (“DPB”) licence)
required for the core competency property management module which must be studied
as part of the RICS rural professional qualification which Mr King wishes to obtain. The
insurance work undertaken would encompass buildings and contents insurance, public
liability insurance, landlords’ policies to cover rental voids and commercial building and
contents insurance depending on the terms of repairing obligations imposed on either
landlord or tenant through the terms of the lease.
9.
The Prospective Employer has made it clear in an email to Mr King that the property
management module must be studied in order to complete the RICS qualification. Email
correspondence between the RICS and Mr King also demonstrates that not only would Mr
King need to find employment at a suitable firm, but that he would also need a RICS-
accredited counsellor to be satisfied of his fitness and propriety.
10.
The Authority has taken into account the email correspondence between the
Prospective Employer and Mr King. The correspondence relates to Mr King’s
enquiries about the safeguards which are or would be in place at the Prospective
Employer, and the Authority considers that it does not address whether in
general Mr King is required to undertake insurance- related work in order to
complete the property management module and thus obtain the RICS
qualification.
11.
The Authority has also considered the email correspondence between Mr King
and the RICS, in which Mr King enquired how he would obtain a RICS
qualification if he were to gain employment with a private landlord who
undertakes its “own in-house estate management activities” and who is not
regulated by the RICS. It appears from this email correspondence that Mr King
would be able to complete the RICS qualification through such employment,
provided he had the support of a RICS-accredited counsellor while undergoing
the Assessment of Professional Competence (“APC”). The Authority considers
that it therefore appears possible for Mr King to obtain the RICS qualification
without needing to be employed by a RICS- regulated firm which is engaged in
insurance-related work.
12.
In light of the above, the Authority considers that refusing to vary the
Prohibition Order is not disproportionate.
There are additional safeguards in place at the Prospective Employer and within the RICS
rules
13.
Granting the Application would enable Mr King to pursue employment within a framework
that has sufficient safeguards in place to mitigate any risk he may pose to consumers
and confidence in the financial system.
14.
The variation sought is narrow in scope and would only allow Mr King to work in general
insurance, which is not linked to the underlying facts of his original offending. The
variation would still have the effect of preventing Mr King from giving advice or setting
up an Authority- or RICS-regulated business to provide insurance advice without being
employed by a surveying firm. The variation could also be specifically linked to a named
employer, thereby restricting Mr King so that he would only be able to carry out work in
relation to insurance business while employed by that named employer.
15.
The Guidance for DPB Rules (“the Guidance”) confirms that the RICS cannot grant a DPB
licence to firms that carry on any other investment business. As Mr King is not applying
for employment at firms that undertake investment business, there is no risk of
reoccurrence of his offending. The Authority can be satisfied that the risk of reoffending
is mitigated by the RICS rules which reinforce and uphold the Authority’s standards in
addition to its own.
16.
The Guidance also states that only a firm associate, partner or director can provide
insurance advice; as a trainee surveyor, Mr King’s junior role would be limited to assisting
claims and filling in forms for insurance proposals. Although the RICS has confirmed to
Mr King that graduates are permitted to provide insurance advice, it is for the member
firm to decide on the extent of that advice. Were the Application to be granted, and Mr
King to be employed by the Prospective Employer, he would be subject to supervision as
a graduate surveyor, and only partners or directors would be permitted to provide
insurance advice. Firms are subject to the terms of the DPB licence, and non-compliance
would have severe consequences for the firm.
17.
Mr King is able to satisfy the additional safeguard of the RICS’s “fit and proper”
requirements as the need to declare his conviction would fall outside the 5-year cut-off
period by the time he intends to attain his professional qualification in September 2025,
and his bankruptcy would similarly “drop off” his file, as he was discharged in October
2020.
18.
Mr King would also be overseen by a RICS-accredited counsellor as another additional
safeguard as part of his APC training; the counsellor would meet with Mr King every three
to six months and would be responsible for certifying his final assessment, if they are
satisfied that Mr King is fit and proper and can complete his training to the high standards
required.
19.
Mr King is serving the remainder of his custodial sentence in the community on licence,
the terms of which require him to seek approval from his probation officer for any work
undertaken between his release date and the end of his licence period in March 2026. He
is also required to provide his employer with his probation officer’s details and to have
monthly meetings with his probation officer. During that period, Mr King will be under
considerable scrutiny and risks being recalled to prison, if there is any suspicion of him
committing any offence, which is a significant deterrent against any reoffending.
20.
It appears to the Authority that refusing Mr King’s Application would not
necessarily prevent Mr King from obtaining the qualifications required to
progress in his chosen field.
21.
The Authority has considered the seriousness of the misconduct that resulted
in Mr King’s Prohibition Order being made (EG 9.6.1(1)). The Authority
considers that limiting the variation of the Prohibition Order in the terms
suggested would not sufficiently eliminate the concerns arising from the fact
that Mr King’s convictions were for very serious dishonesty offences of theft and
fraud, involving vulnerable victims, and that there would remain opportunities
to re-offend when performing insurance- related work.
22.
Mr King’s Prohibition Order was made by the Authority, which remains
responsible for upholding its own standards and has to make its own
assessment as to whether the Prohibition Order should be varied. Having regard
to EG 9.6.4, the Authority needs to be satisfied that granting the Application will
not result in a reoccurrence of the risk to consumers or confidence in the
financial system that resulted in Mr King’s Prohibition Order being made, and
that Mr King is fit to perform functions in relation to the specific regulated
activity which he seeks to carry on. The Authority has to assess Mr King’s fitness
and propriety to perform these functions based on the criteria in FIT 2.1, FIT
2.2 and FIT 2.3.
23.
The Authority has considered the email correspondence between Mr King, the
Prospective Employer and the RICS. However, the Authority has not had sight
of any details of safeguards or supervision arrangements in place at the
Prospective Employer. Accordingly, the Authority has not been able to assess
their adequacy.
24.
The Authority has not seen any evidence to support Mr King’s position that his
bankruptcy will have “dropped off” his file by October 2025, and notes that the
Insolvency Service imposed additional bankruptcy restrictions for 12 years
following discharge, namely until October 2032. Even if Mr King did not need to
declare his conviction for the purposes of the RICS “fit and proper” test once he
has obtained his professional qualification, the Authority does not consider that
this is relevant to the present question of whether it should grant the
Application on the basis of his current fitness and propriety.
25.
The Authority has considered EG 9.6.1(2) which states that a relevant factor in
considering whether to grant or refuse an application to vary a prohibition order
is the amount of time since the original order was made. The Authority is
mindful that it has only been three and a half years since Mr King’s conviction
and just under two years since the Prohibition Order was imposed on him. The
Authority is not satisfied on the basis of the evidence received that Mr King has
sufficiently demonstrated his fitness and propriety in the context of the
Authority’s criteria in FIT 2.1 and considers that there would be a detrimental
impact on confidence in the financial system if the Application were granted in
these circumstances.
26.
The Authority acknowledges the deterrent effect upon Mr King at the prospect
of being recalled to prison. However, the Authority considers that his honesty
and integrity, and the temptation to reoffend, need to be properly tested after
he has fully re-entered society and without restriction.
27.
In light of the above, the Authority is not satisfied that the safeguards referred
to by Mr King are sufficient to eliminate the risk he poses to consumers and to
confidence in the financial system.
Mr King’s circumstances can be distinguished from the cases cited by the Authority
28.
The Authority has cited cases as precedents which are not comparable to Mr King’s
offending behaviour, the level of money involved, nor his co-operation with the Authority
or law enforcement.
29.
The Authority has considered carefully the cases referred to. It does not agree
with Mr King’s assessment of the differences between those cases and his own
circumstances, or with his views on why they should be discounted as
comparator cases.
30.
The Authority recognises the real progress and achievements that Mr King has
made while in prison, and that he has had time to reflect on the impact of his
offending on his family members. The Authority also acknowledges the steps he
has taken to reconcile with his family, and to find gainful employment while in
custody. It is to Mr King’s credit that he is actively seeking to re-enter society
and to build a new career which will help him to support his family in the future.
31.
Having considered all the circumstances in the case and for the reasons set out
above and in the Notice, the Authority is not satisfied that the Application should
be granted.
1.
ACTION
1.1
For the reasons given in this Final Notice, the Authority has decided to refuse an
application by Mr David Nicholas King to vary the Prohibition Order imposed on him on
22 July 2021.
1.2
The Authority gave Mr King a Decision Notice on 13 March 2023, which notified Mr King
of the above decision in relation to his Application.
1.3
Mr King has not referred the matter to the Tribunal within 28 days of the date on which
the Decision Notice was given to him.
1.4
Accordingly, the Authority hereby refuses the Application by Mr King to vary the
Prohibition Order imposed on him.
2.
SUMMARY OF REASONS
2.1
On 22 July 2021, the Authority issued the 2021 Final Notice which imposed the Prohibition
Order on Mr King. The Prohibition Order prohibited Mr King from performing any function
in relation to any regulated activity carried on by any authorised person, exempt person
or exempt professional firm.
2.2
The Prohibition Order was imposed on Mr King after he had been convicted in October
2019 of three counts of theft, one count of fraud by false representation and one count
of acquiring/using/possessing criminal property. The Authority concluded that these
convictions demonstrate that Mr King is not a fit and proper person to perform functions
in relation to regulated activities, and that it was therefore appropriate to impose the
Prohibition Order.
2.3
On 1 February 2022, Mr King submitted an application (“the Application”) for the variation
of the Prohibition Order under section 56(7) of the Act so as to permit him to carry on
2
the regulated activity of “assisting in the administration and performance of a contract of
insurance”. Mr King stated in the Application that the variation was necessary to progress
an application for employment with a specific rural chartered surveying firm (“the
Prospective Employer”). Mr King has subsequently provided further information
concerning the possibility of his pursuing a paid summer internship with a national
property adviser (“the Prospective Internship”), as well as completing the RICS
qualification while working for a private landlord (“the Prospective Private Landlord
Employment”) who undertakes its own in-house estate management activities
2.4
Having considered all the relevant circumstances of the case, the Authority has decided
to refuse the Application for the following reasons:
i)
Mr King engaged in criminal activity over a prolonged period (2010 – 2017), when
he stole, or obtained by fraud, around £608,000 from family members and a
friend. In so doing, Mr King demonstrated a clear and serious lack of honesty and
integrity.
ii)
On 21 November 2019, Mr King was sentenced to a total term of six years and
four months’ imprisonment. Mr King was released from prison on 19 January 2023
and is serving the remainder of his custodial sentence in the community on licence.
Mr King has therefore had insufficient opportunity to demonstrate that he has
remedied the Authority’s concerns over his honesty and integrity. He has not been
in situations in which the same or similar opportunities for reoffending could occur,
because of the restrictions and limitations in place. Accordingly, the Authority
considers that the Application is premature.
iii)
Mr King has provided insufficient evidence of the roles he hopes to pursue at the
Prospective Employer, Prospective Internship or Prospective Private Landlord
Employment, and the safeguards that would be in place were he to secure
employment. Moreover, it is not apparent that a variation of the Prohibition Order
is necessary for Mr King to pursue his chosen profession in rural chartered
surveying.
2.5
Accordingly, the Authority is not satisfied that the unfitness which gave rise to the
Prohibition Order has been remedied, and that, were the Prohibition Order to be varied,
this would not result in a reoccurrence of the risk to consumers and/or to the integrity of
the UK financial system that resulted in the Prohibition Order being made; nor that Mr
King is now fit and proper to perform functions in relation to regulated activities.
3.
DEFINITIONS
3.1
The definitions below are used in this Final Notice:
“the 2020 Warning Notice”; means the warning notice given to Mr King dated 17
December 2020;
“the 2021 Decision Notice” means the decision notice given to Mr King dated 13 May
2021;
“the 2021 Final Notice” means the final notice given to Mr King dated 22 July 2021;
“the Act” means the Financial Services and Markets Act 2000;
3
“the Application” means the application made by Mr King on 1 February 2022 to vary the
Prohibition Order;
“the Authority” means the Financial Conduct Authority;
“the Decision Notice” means the decision notice given to Mr King dated 13 March 2023;
“EG” means the Authority’s Enforcement Guide;
“FIT” means the ‘Fit and Proper Test for Employees and Senior Personnel’, forming part
of the Handbook;
“the Handbook” means the Authority’s Handbook of Rules and Guidance;
“the Prohibition Order” means the prohibition order imposed on Mr King on 22 July 2021;
“the Prospective Employer” has the meaning set out in paragraph 2.3 of this Final Notice;
“the Prospective Internship” has the meaning set out in paragraph 2.3 of this Final Notice;
“the Prospective Private Landlord Employment” has the meaning set out in paragraph 2.3
of this Final Notice;
“RDC” means the Regulatory Decisions Committee of the Authority (see further at
paragraph 7.3 below);
“RICS” means the Royal Institution of Chartered Surveyors;
“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber); and
“the Warning Notice” means the warning notice given to Mr King dated 7 December 2022.
4.
FACTS AND MATTERS
4.1
Whilst an employee of, and an approved person at, authorised firms, Mr King engaged in
the following criminal offences:
4.1.1 three counts of theft, contrary to sections 1(1) and 7 of the Theft Act 1968;
4.1.2 one count of fraud by false representation, contrary to sections 1 and 2 of the
Fraud Act 2006; and
4.1.3 one count of acquiring, using and possessing criminal property, contrary to
sections 329(1) and 334 of the Proceeds of Crime Act 2002.
4.2
These offences occurred from 1 February 2010 to 31 December 2017 and the total
amount stolen, or obtained by fraud, from the victims was in the region of £608,000.
4.3
Mr King committed fraud on his family members by taking their share of his grandparents’
estate which they had inherited, amounting to approximately £573,000, and using it to
fund his own lifestyle. Mr King committed an additional fraud against a friend when he
personally guaranteed bridging finance on a property purchase, intending to make a gain
of £35,000 for himself.
4.4
On 3 October 2019, Mr King pleaded guilty to and was convicted of the above offences
at Sheffield Magistrates Court.
4.5
On 21 November 2019, Mr King was sentenced at Sheffield Crown Court to a total term
of six years and four months’ imprisonment.
4.6
At the sentencing hearing, the judge made the following observations:
4.6.1 Mr King “connived and contrived” to hide his dishonesty; he “forged documents”;
and he “lied to family and friends and repeated those lies time and… time again…”;
4.6.2 Mr King’s behaviour was “utterly selfish” and he “did not have a care in the world
for the impact and psychological harm” that he had caused others;
4.6.3 as regards the degree of trust breached by Mr King, it was “…beyond high; if it’s
not trust, it’s responsibility”;
4.6.4 in respect of count 1, which related to Mr King stealing over £500,000 from the
estate of his grandmother, there “was almost every imaginable aggravating
feature”; and
4.6.5 although Mr King had returned £305,000 of the money he had taken, it was only
returned because he was “caught out”.
4.7
By reason of the above facts and matters, the Authority considered that Mr King lacked
honesty and integrity and posed a serious risk to consumers, financial institutions and to
confidence in the market generally, and that he was not a fit and proper person to perform
functions in relation to regulated activities and so should be prohibited from performing
such functions. Following the issue of the 2020 Warning Notice on 17 December 2020,
Mr King made representations as to why the Prohibition Order should not be imposed (as
set out in Annex B of the 2021 Final Notice). Having taken these into account, on 13 May
2021, the Authority issued the 2021 Decision Notice. Mr King did not exercise his right to
refer the matter to the Tribunal and therefore, on 22 July 2021, the Authority made the
Prohibition Order against Mr King and issued the 2021 Final Notice notifying him of this.
The Application
4.8
On 1 February 2022, Mr King applied to vary the Prohibition Order to permit him to carry
on the regulated activity of “assisting in the administration and performance of a contract
of insurance”.
4.9
Mr King explained in the Application that the fact that the Prohibition Order does not
permit him to carry on that activity impedes his ability to obtain employment as a rural
chartered surveyor at the Prospective Employer, which engages in regulated insurance
activities.
4.10
The key grounds cited by Mr King in support of the Application are, in summary, as
follows:
5
4.10.1 the variation is necessary to progress an application for employment with the
Prospective Employer;
4.10.2 he has taken full accountability for the offences committed and there has been
no repeat offending;
4.10.3 his offences were not committed while undertaking the regulated activity in
respect of which he now seeks a variation;
4.10.4 he has been sufficiently rehabilitated and no longer poses a risk to consumers
and confidence in the UK financial system, as evidenced by: (i) his enrolment in
a charitable outreach programme; and (ii) character references which he has
provided;
4.10.5 any risk he continues to pose will be mitigated by the checks and safeguards in
place at the Prospective Employer;
4.10.6 he will only be “assisting a Director level partner” in relation to insurance related
work for the initial two year training period at the Prospective Employer, and he
does not anticipate he would carry out this activity on his own account until a
further three years thereafter;
4.10.7 he is under no financial duress which may lead to re-offending;
4.10.8 following his release from prison in January 2023, he will serve the remainder of
his sentence under licence until March 2026, and during this time he can be
recalled to prison for suspected offending;
4.10.9 the Application is to vary the Prohibition Order in a limited respect rather than for
wholesale revocation; and
4.10.10 he is willing for any variation to the Prohibition Order to be “tied” to the regulated
work of a particular firm, such as the Prospective Employer.
4.11
Mr King was released from prison on 19 January 2023 and is now serving the remainder
of his custodial sentence in the community on licence. Mr King has since informed the
Authority that the variation is also necessary for him to be able to pursue the Prospective
Internship, and that he wishes to be able to complete his RICS qualification through the
Prospective Private Landlord Employment.
5.
LACK OF FITNESS AND PROPRIETY
5.1
The statutory and regulatory provisions relevant to this Notice are set out in detail in
Annex A.
5.2
Having considered all the relevant circumstances and having regard to the provisions of
EG 9.6.1, the Authority has decided to refuse the Application for the following reasons.
5.3
The nature and circumstances of Mr King’s offending demonstrate a serious and clear lack
of honesty and integrity:
5.3.1 he committed the offences against family members and a friend, thereby
abusing the position of trust he held;
6
5.3.2 certain of his offences involved him taking advantage of vulnerable victims;
5.3.3 he committed multiple offences over a prolonged period (1 February 2010 to 31
December 2017);
5.3.4 he obtained a substantial economic benefit from his offences (although he has
since repaid £305,000 of such benefit to the victims); and
5.3.5 the sentencing judge was particularly critical of his behaviour.
5.4
Although Mr King says he has accepted full responsibility for his offending, as well as
progressed with his rehabilitation, in the Authority’s view the Application is premature
for the following reasons:
5.4.1 Approximately three and a half years have passed since Mr King was convicted
(on 3 October 2019) and just under two years since the Prohibition Order was
imposed (on 22 July 2021). While the Authority does not specify a minimum
period after which it will consider an application for variation or revocation of a
prohibition order, the passage of time is relevant insofar as it allows an individual
to rehabilitate and to demonstrate this. The Authority is not satisfied that Mr King
has had sufficient time and opportunity to rehabilitate. Mr King has only recently
been released from prison and is serving the remainder of his sentence in the
community on licence; he acknowledges that the probation order to which he is
subject acts as a serious deterrent to repeat offending. Mr King has thus far been
unable to provide sufficient evidence of having been in a role which gives rise to
relevant opportunities for re-offending. The Authority is of the view that until he
has served his sentence in full and re-entered society without restriction, his
honesty and integrity cannot be properly tested.
5.4.2 Insufficient evidence has been provided by Mr King for the Authority to conclude
that he has been rehabilitated. The Authority acknowledges that character
references written by family members show that Mr King has sought to rebuild
relationships with the victims of his offending. However, neither they, nor the
other testimonials submitted by Mr King, provide evidence of his conduct in
situations where he was exposed to relevant opportunities for re-offending.
5.5
In the circumstances, the Authority is not satisfied that the unfitness which gave rise
to the Prohibition Order has been remedied and will not occur again.
5.6
Further, a number of statements by Mr King in respect of the roles he is pursuing at
the Prospective Employer, the Prospective Internship and the Prospective Private
Landlord Employment are not supported by any documentary evidence. For example,
Mr King says that the contracts of insurance he would be dealing with at the
Prospective Employer are “considerably low risk” to the public and the UK financial
system, and that his involvement with them would be limited. However, Mr King has
been unable to provide the Authority with full details of what the role he hopes to
obtain at the Prospective Employer would entail, the types of contracts of insurance he
would be dealing with and the activities he would be carrying out in respect of these.
Mr King has also been unable to provide the Authority with evidence of the Prospective
Employer’s checks and safeguards against any future risk as the Prospective Employer
has not shared this information with him. As Mr King’s applications for the Prospective
Internship and the Prospective Private Landlord Employment are in their early stages,
Mr King has also been unable to provide the Authority with any documentary
7
evidence demonstrating the precise nature of the roles and responsibilities involved, to
enable it to be satisfied that the Prohibition Order should be varied. Accordingly, the
Authority has been provided with insufficient evidence and information to determine
whether the roles are sufficiently limited to mitigate adequately the risk Mr King poses
to consumers and the integrity of the UK financial system.
5.7
Mr King has further stated that, as the Prospective Employer does not carry on
investment business, there is no risk of a reoccurrence of the risks to the public
related to his previous offending. However, insurance related work may in certain
circumstances give rise to opportunities for re-offending and misconduct, such as
(among other things) misappropriating client money, failing to pass on claim proceeds
in full and non-disclosure of commission.
5.8
To allay the Authority’s concerns, Mr King has suggested that the proposed variation
could be “tied” to the regulated insurance work of a particular firm, such as the
Prospective Employer. However, without evidence of the specific measures and
controls in place at the Prospective Employer, which has told Mr King that it does not
wish to divulge details of its internal procedures, the Authority cannot assess in its
consideration of the Application whether there are sufficient safeguards to eliminate
the risk that Mr King poses.
5.9
The Authority has also had regard to Mr King’s financial position. Mr King has a history
of failing to manage his financial affairs soundly, resulting in his bankruptcy in October
2019. Although he has since been discharged from bankruptcy, the Authority notes
that the Insolvency Service has imposed additional bankruptcy restrictions for a period
of 12 years following discharge (i.e. until October 2032), and Mr King is not in current
employment. The Authority therefore considers Mr King’s current financial position to
be uncertain.
5.10
The Authority accepts that the Prohibition Order may have adverse effects on Mr
King’s career advancement but considers that this is not disproportionate when
weighed against the harm that the Prohibition Order is intended to avoid.
5.11
In this regard, the Authority notes that Mr King has not yet been provided with an
offer of employment from the Prospective Employer, nor confirmation of his place at
either the Prospective Internship or of the Prospective Private Landlord Employment,
and from the evidence provided by Mr King it does not appear that such an offer from
the Prospective Employer will necessarily be forthcoming if the Prohibition Order is
varied.
5.12
It is also not apparent that a variation of the Prohibition Order is necessary for Mr King
to pursue his chosen profession in rural chartered surveying, as there may be other
employers in the industry who have no concurrent insurance business. Mr King has
provided no evidence or information in this respect. Nor does it appear to the Authority
from the materials provided by Mr King that engaging in insurance-related work is a
pre-requisite for qualifying as a RICS rural chartered surveyor.
5.13
Having regard to the provisions in EG 9.6, and for the reasons set out in paragraphs 5.3
to 5.12 above:
5.13.1 The Authority is not satisfied that Mr King no longer poses a risk to consumers,
or to the integrity of the UK financial system, particularly in view of the absence of
sufficient evidence of rehabilitation.
5.13.2 The Authority is not satisfied that, were the Prohibition Order to be varied, this
would not result in a reoccurrence of the risks to consumers and to the integrity
of the UK financial system, that resulted in the Prohibition Order being made.
5.13.3 The Authority is not satisfied that Mr King is a fit and proper person to perform
any functions in relation to regulated activities by reference to the criteria in FIT,
specifically FIT 2.1 (honesty, integrity and reputation) and FIT 2.3 (financial
soundness).
5.13.4 The Authority is satisfied that it is not disproportionate to refuse the Application
to vary the Prohibition Order in the terms sought, as the negative impact on Mr
King’s career prospects is outweighed by the need to protect against the ongoing
risks he represents to consumers and to the integrity of the UK financial system.
6.
REPRESENTATIONS
6.1
Annex B contains a brief summary of the key representations made by Mr King and how
they have been dealt with. In making the decision which gave rise to the obligation to
give this Final Notice, the Authority has taken into account all the representations made
by Mr King, whether or not set out in Annex B.
7.
PROCEDURAL MATTERS
7.1
This Final Notice is given to Mr King under, and in accordance with, Section 390(1) of the
Act.
7.2
The following paragraphs are important.
Decision Maker
7.3
The decision which gave rise to the obligation to give this Final Notice was made by the
RDC. The RDC is a committee of the Authority which takes certain decisions on behalf of
the Authority. The members of the RDC are separate to the Authority staff involved in
conducting investigations and recommending action against firms and individuals. Further
information about the RDC can be found on the Authority’s website:
7.4
Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of information
about the matter to which this Final Notice relates. Under those provisions, the Authority
must publish such information about the matter to which this Final Notice relates as the
Authority considers appropriate.
7.5
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 Mr King or prejudicial to the interests of the
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.
Authority Contacts
7.7
For more information concerning this matter generally, contact Shehraz Hussain at the
Authority (direct line: 020 7066 8006/email: shehraz.hussain@fca.org.uk).
Threshold Conditions Team Manager
Financial Conduct Authority, Enforcement and Market Oversight
ANNEX A
RELEVANT STATUTORY AND REGULATORY PROVISIONS
1.
The Authority’s operational objectives are set out in section 1B(3) of the Act and include
securing an appropriate degree of protection for consumers (section 1C of the Act) and
protecting and enhancing the integrity of the UK financial system (section 1D of the Act).
2.
Section 56(7) of the Act states that the Authority may, on the application of the individual
named in a prohibition order made by it, vary or revoke it.
3.
Section 58 of the Act sets out the procedure for granting or refusing an application for
variation or revocation of a prohibition order.
4.
In considering whether to grant or refuse an application for the variation or revocation of
a prohibition order, the Authority must have regard to relevant provisions in the
Handbook. The main provisions that the Authority considers to be relevant to this case
are set out below.
The Enforcement Guide
5.
The Authority’s approach to exercising its power to grant or refuse an application for the
variation or revocation of a prohibition order is set out in Chapter 9.6 of EG.
6.
EG 9.6.1 provides that, when considering whether to grant or refuse an
application to revoke or vary a prohibition order, the Authority will consider all the
relevant circumstances of a case. These may include, but are not limited to, the following:
(1)
the seriousness of the misconduct or other unfitness that resulted in the order;
(2)
the amount of time since the original order was made;
(3)
any steps taken subsequently by the individual to remedy the misconduct or other
unfitness;
(4)
any evidence which, had it been known to the Authority at the time, would have
been relevant to the Authority’s decision to make the prohibition order;
(5)
all available information relating to the individual’s honesty, integrity or
competence since the order was made, including any repetition of the misconduct
which resulted in the prohibition order being made;
(6)
where the Authority’s finding of unfitness arose from incompetence rather than
from dishonesty or lack of integrity, evidence that this unfitness has been or will
be remedied; for example, this may be achieved by the satisfactory completion of
relevant training and obtaining relevant qualifications, or by supervision of the
individual by his employer;
(7)
the financial soundness of the individual concerned; and
(8)
whether the individual will continue to pose the level of risk to consumers or
confidence in the financial system which resulted in the original prohibition if it is
lifted.
7.
EG 9.6.3 provides that if the individual applying for a revocation or variation of a
prohibition order proposes to take up an offer of employment to perform a controlled
function, the Authority will take this into account when considering whether to grant or
refuse the application.
8.
EG 9.6.4 provides that the Authority will not generally grant an application to vary or
revoke a prohibition order unless it is satisfied that: the proposed variation will not result
in a reoccurrence of the risk to consumers or confidence in the financial system that
resulted in the order being made; and the individual is fit to perform functions in relation
to regulated activities generally, or to those specific regulated activities in relation to
which the individual has been prohibited. The Authority will assess the individual's fitness
and propriety to perform these functions on the basis of the criteria in FIT 2.1 (Honesty,
integrity and reputation), FIT 2.2 (Competence and capability) and FIT 2.3 (Financial
soundness).
The Fit and Proper test for Employees and Senior Personnel sourcebook (FIT)
9.
FIT sets out the criteria that the Authority will consider when assessing the fitness and
propriety of a candidate for a controlled function, and may consider when assessing the
continuing fitness and propriety of approved persons (FIT 1.1.2G(2).
10.
The main assessment criteria to which the Authority will have regard when assessing the
fitness and propriety of a person to perform a particular controlled function are described
in FIT 2, by reference to: honesty, integrity and reputation (FIT 2.1); competence and
capability (FIT 2.2); and financial soundness (FIT 2.3).
11.
FIT 2.1.1 G provides that in determining a person’s honesty, integrity and reputation, the
Authority will have regard to all relevant matters including, but not limited to, those set
out in FIT 2.1.3 G.
12.
In relation to convictions for criminal offences, FIT 2.1.1A G states that: If any staff being
assessed under FIT has a conviction for a criminal offence, the firm should consider the
seriousness of and circumstances surrounding the offence, the explanation offered by
that person, the relevance of the offence to the proposed role, the passage of time since
the offence was committed and evidence of the individual’s rehabilitation.
13.
FIT 2.1.3 G provides a non-exhaustive list of matters to which the Authority will have
regard when determining a person’s honesty, integrity and reputation. These include:
(1)
whether the person has been convicted of any criminal offence; this must include,
where provided for by the Rehabilitation Exceptions Orders to the Rehabilitation
of Offenders Act 1974 or the Rehabilitation of Offenders (Northern Ireland) Order
1978 (as applicable), any spent convictions; particular consideration will be given
to offences of dishonesty, fraud, financial crime or an offence under legislation
relating to companies, building societies, industrial and provident societies, credit
unions, friendly societies, banking, other financial services, insolvency, consumer
credit companies, insurance, consumer protection, money laundering, market
manipulation and insider dealing, whether or not in the United Kingdom;
14.
FIT 2.3.1 G provides a non-exhaustive list of factors to which the Authority will have
regard when determining a person’s financial soundness. These include:
(1)
whether, in the United Kingdom or elsewhere, the person has made any
arrangements with their creditors, filed for bankruptcy, had a bankruptcy petition
served on them, been adjudged bankrupt, been the subject of a bankruptcy
restrictions order (including an interim bankruptcy restrictions order), offered a
bankruptcy restrictions undertaking, had assets sequestrated, or been involved in
proceedings relating to any of these.
ANNEX B
REPRESENTATIONS
1.
A summary of the key representations made by Mr King, and the Authority’s
conclusions in respect of them (in bold), is set out below.
The Application is not premature
2.
The Application is not premature as it was sought with a view to securing a role at the
Prospective Employer. Any graduate employment secured at the Prospective Employer
would only commence in September 2023, some 9 months after Mr King’s release from
prison. However, Mr King has been unable to proceed with a summer internship or a
graduate placement with the Prospective Employer due to there being no variation to the
Prohibition Order in time.
3.
Mr King is also pursuing a paid, month-long, Prospective Internship with a national
property adviser; should that internship be unsuccessful, then Mr King would apply for
their Winter 2023 graduate scheme intake, with employment to commence in September
2024.
4.
The Application should not be refused on the basis that Mr King has not been placed in a
position of trust with responsibility for monies since his conviction. As the Prohibition
Order prevents Mr King from undertaking regulated functions, it is unrealistic to expect
Mr King to have gained this experience prior to making the Application.
5.
In order to be satisfied that it is appropriate to vary the Prohibition Order, the
Authority needs to be satisfied that Mr King no longer poses a risk to consumers
or to the integrity of the UK financial system. The burden of proving that he is
fit and proper lies with Mr King. The Authority considers that strong and
compelling evidence that Mr King no longer poses a risk is needed in order to
grant a variation of the Prohibition Order, in circumstances where Mr King is
serving the remainder of his custodial sentence in the community on licence, as
the temptation to re-offend may be outweighed by the threat of a return to
prison. Mr King has not provided such evidence, and in light of his recent release
from prison is not yet in a position to do so.
6.
The Authority recognises that Mr King has made the Application to assist with
his employment applications, but considers that the negative impact on his
career prospects is outweighed by the need to protect against the ongoing risks
he presents to consumers and to the integrity of the UK financial system. As Mr
King has not yet been able to demonstrate that he has remedied the Authority’s
concerns regarding his honesty and integrity, the Authority remains of the view
that the Application is premature.
7.
Mr King’s Prospective Internship and Prospective Private Landlord Employment
indicate that his prospects of employment are not wholly contingent on varying
the Prohibition Order. It may therefore be possible for him to gain experience
in his chosen sector, where his honesty and integrity will be tested in roles
where there are opportunities for re-offending. It is also open for Mr King to
consider roles outside that sector, which do not require a variation of the
Prohibition Order, that would enable him to demonstrate his honesty and
integrity.
The variation is needed for Mr King to complete his RICS rural professional qualification
8.
The variation of the Prohibition Order is needed so that Mr King can undertake the
insurance work (as stipulated under the Designated Professional Body (“DPB”) licence)
required for the core competency property management module which must be studied
as part of the RICS rural professional qualification which Mr King wishes to obtain. The
insurance work undertaken would encompass buildings and contents insurance, public
liability insurance, landlords’ policies to cover rental voids and commercial building and
contents insurance depending on the terms of repairing obligations imposed on either
landlord or tenant through the terms of the lease.
9.
The Prospective Employer has made it clear in an email to Mr King that the property
management module must be studied in order to complete the RICS qualification. Email
correspondence between the RICS and Mr King also demonstrates that not only would Mr
King need to find employment at a suitable firm, but that he would also need a RICS-
accredited counsellor to be satisfied of his fitness and propriety.
10.
The Authority has taken into account the email correspondence between the
Prospective Employer and Mr King. The correspondence relates to Mr King’s
enquiries about the safeguards which are or would be in place at the Prospective
Employer, and the Authority considers that it does not address whether in
general Mr King is required to undertake insurance- related work in order to
complete the property management module and thus obtain the RICS
qualification.
11.
The Authority has also considered the email correspondence between Mr King
and the RICS, in which Mr King enquired how he would obtain a RICS
qualification if he were to gain employment with a private landlord who
undertakes its “own in-house estate management activities” and who is not
regulated by the RICS. It appears from this email correspondence that Mr King
would be able to complete the RICS qualification through such employment,
provided he had the support of a RICS-accredited counsellor while undergoing
the Assessment of Professional Competence (“APC”). The Authority considers
that it therefore appears possible for Mr King to obtain the RICS qualification
without needing to be employed by a RICS- regulated firm which is engaged in
insurance-related work.
12.
In light of the above, the Authority considers that refusing to vary the
Prohibition Order is not disproportionate.
There are additional safeguards in place at the Prospective Employer and within the RICS
rules
13.
Granting the Application would enable Mr King to pursue employment within a framework
that has sufficient safeguards in place to mitigate any risk he may pose to consumers
and confidence in the financial system.
14.
The variation sought is narrow in scope and would only allow Mr King to work in general
insurance, which is not linked to the underlying facts of his original offending. The
variation would still have the effect of preventing Mr King from giving advice or setting
up an Authority- or RICS-regulated business to provide insurance advice without being
employed by a surveying firm. The variation could also be specifically linked to a named
employer, thereby restricting Mr King so that he would only be able to carry out work in
relation to insurance business while employed by that named employer.
15.
The Guidance for DPB Rules (“the Guidance”) confirms that the RICS cannot grant a DPB
licence to firms that carry on any other investment business. As Mr King is not applying
for employment at firms that undertake investment business, there is no risk of
reoccurrence of his offending. The Authority can be satisfied that the risk of reoffending
is mitigated by the RICS rules which reinforce and uphold the Authority’s standards in
addition to its own.
16.
The Guidance also states that only a firm associate, partner or director can provide
insurance advice; as a trainee surveyor, Mr King’s junior role would be limited to assisting
claims and filling in forms for insurance proposals. Although the RICS has confirmed to
Mr King that graduates are permitted to provide insurance advice, it is for the member
firm to decide on the extent of that advice. Were the Application to be granted, and Mr
King to be employed by the Prospective Employer, he would be subject to supervision as
a graduate surveyor, and only partners or directors would be permitted to provide
insurance advice. Firms are subject to the terms of the DPB licence, and non-compliance
would have severe consequences for the firm.
17.
Mr King is able to satisfy the additional safeguard of the RICS’s “fit and proper”
requirements as the need to declare his conviction would fall outside the 5-year cut-off
period by the time he intends to attain his professional qualification in September 2025,
and his bankruptcy would similarly “drop off” his file, as he was discharged in October
2020.
18.
Mr King would also be overseen by a RICS-accredited counsellor as another additional
safeguard as part of his APC training; the counsellor would meet with Mr King every three
to six months and would be responsible for certifying his final assessment, if they are
satisfied that Mr King is fit and proper and can complete his training to the high standards
required.
19.
Mr King is serving the remainder of his custodial sentence in the community on licence,
the terms of which require him to seek approval from his probation officer for any work
undertaken between his release date and the end of his licence period in March 2026. He
is also required to provide his employer with his probation officer’s details and to have
monthly meetings with his probation officer. During that period, Mr King will be under
considerable scrutiny and risks being recalled to prison, if there is any suspicion of him
committing any offence, which is a significant deterrent against any reoffending.
20.
It appears to the Authority that refusing Mr King’s Application would not
necessarily prevent Mr King from obtaining the qualifications required to
progress in his chosen field.
21.
The Authority has considered the seriousness of the misconduct that resulted
in Mr King’s Prohibition Order being made (EG 9.6.1(1)). The Authority
considers that limiting the variation of the Prohibition Order in the terms
suggested would not sufficiently eliminate the concerns arising from the fact
that Mr King’s convictions were for very serious dishonesty offences of theft and
fraud, involving vulnerable victims, and that there would remain opportunities
to re-offend when performing insurance- related work.
22.
Mr King’s Prohibition Order was made by the Authority, which remains
responsible for upholding its own standards and has to make its own
assessment as to whether the Prohibition Order should be varied. Having regard
to EG 9.6.4, the Authority needs to be satisfied that granting the Application will
not result in a reoccurrence of the risk to consumers or confidence in the
financial system that resulted in Mr King’s Prohibition Order being made, and
that Mr King is fit to perform functions in relation to the specific regulated
activity which he seeks to carry on. The Authority has to assess Mr King’s fitness
and propriety to perform these functions based on the criteria in FIT 2.1, FIT
2.2 and FIT 2.3.
23.
The Authority has considered the email correspondence between Mr King, the
Prospective Employer and the RICS. However, the Authority has not had sight
of any details of safeguards or supervision arrangements in place at the
Prospective Employer. Accordingly, the Authority has not been able to assess
their adequacy.
24.
The Authority has not seen any evidence to support Mr King’s position that his
bankruptcy will have “dropped off” his file by October 2025, and notes that the
Insolvency Service imposed additional bankruptcy restrictions for 12 years
following discharge, namely until October 2032. Even if Mr King did not need to
declare his conviction for the purposes of the RICS “fit and proper” test once he
has obtained his professional qualification, the Authority does not consider that
this is relevant to the present question of whether it should grant the
Application on the basis of his current fitness and propriety.
25.
The Authority has considered EG 9.6.1(2) which states that a relevant factor in
considering whether to grant or refuse an application to vary a prohibition order
is the amount of time since the original order was made. The Authority is
mindful that it has only been three and a half years since Mr King’s conviction
and just under two years since the Prohibition Order was imposed on him. The
Authority is not satisfied on the basis of the evidence received that Mr King has
sufficiently demonstrated his fitness and propriety in the context of the
Authority’s criteria in FIT 2.1 and considers that there would be a detrimental
impact on confidence in the financial system if the Application were granted in
these circumstances.
26.
The Authority acknowledges the deterrent effect upon Mr King at the prospect
of being recalled to prison. However, the Authority considers that his honesty
and integrity, and the temptation to reoffend, need to be properly tested after
he has fully re-entered society and without restriction.
27.
In light of the above, the Authority is not satisfied that the safeguards referred
to by Mr King are sufficient to eliminate the risk he poses to consumers and to
confidence in the financial system.
Mr King’s circumstances can be distinguished from the cases cited by the Authority
28.
The Authority has cited cases as precedents which are not comparable to Mr King’s
offending behaviour, the level of money involved, nor his co-operation with the Authority
or law enforcement.
29.
The Authority has considered carefully the cases referred to. It does not agree
with Mr King’s assessment of the differences between those cases and his own
circumstances, or with his views on why they should be discounted as
comparator cases.
30.
The Authority recognises the real progress and achievements that Mr King has
made while in prison, and that he has had time to reflect on the impact of his
offending on his family members. The Authority also acknowledges the steps he
has taken to reconcile with his family, and to find gainful employment while in
custody. It is to Mr King’s credit that he is actively seeking to re-enter society
and to build a new career which will help him to support his family in the future.
31.
Having considered all the circumstances in the case and for the reasons set out
above and in the Notice, the Authority is not satisfied that the Application should
be granted.