FINAL NOTICE

TAKE NOTICE: The Financial Services Authority of 25 The North Colonnade,
Canary Wharf, London E14 5HS (the FSA) proposes to take the following action

1.
ACTION

1.1. By an application received by the FSA on 4 May 2010 (“the Application”) DCR
Strategies UK Limited (“DCR”) applied under Regulation 12 of the Payment Services
Regulations 2009 (“the PSRs”) for registration as a small payment institution and to
perform the following payment services:

(a) services enabling cash to be placed on a payment account and all of the
operations required for operating a payment account;

(b) services enabling cash withdrawals from a payment account and all of the
operations required for operating a payment account;

(c)
the execution of the following types of payment transaction—

(i)
direct debits, including one-off direct debits;

(ii)
payment transactions executed through a payment card or a similar
device;

(iii)
credit transfers, including standing orders;

(d) the execution of the following types of payment transaction where the funds are
covered by a credit line for the payment service user—

(i)
direct debits, including one-off direct debits;

(ii)
payment transactions executed through a payment card or a similar
device;

(iii)
credit transfers, including standing orders;

(e)
issuing payment instruments or acquiring payment transactions;

(f)
money remittance; and

(g) the execution of payment transactions where the consent of the payer to execute
the payment transaction is given by means of any telecommunication, digital or
IT device and the payment is made to the telecommunication, IT system or
network operator acting only as an intermediary between the payment service
user and the supplier of the goods or services.

1.2. The Application is incomplete.

1.3. For the reasons listed below and pursuant to Regulation 9(2) of the PSRs, the FSA has
refused the Application.

2.
REASONS FOR ACTION

2.1. By its Warning Notice dated 10 June (“the Warning Notice”), issued pursuant to
Regulation 9(7) of the PSRs, the FSA gave notice that it proposed to refuse the
Application and that DCR was entitled to make representations to the FSA about that
proposed action.

2.2. As no representations have been received from DCR by the FSA within the time
allowed by the Warning Notice, the default procedures in paragraph 2.3.2 of the FSA's
Decision Procedure and Penalties manual apply, permitting the FSA to treat the matters
referred to in its Warning Notice as undisputed. By its Decision Notice dated 14 July
("the Decision Notice"), the FSA gave DCR notice that it had decided to refuse the
application.

2.3. Under Regulation 9(9) of the PSRs DCR had the right to refer the matter to the Upper
Tribunal (formerly known as the Financial Services and Markets Tribunal). No
reference was made to the Upper Tribunal within the time allowed by the Decision
Notice or to date.

2.4. On the basis of the facts and matters described below, the FSA has concluded that DCR
does not satisfy, and will continue not to satisfy, the ‘Conditions for registration as a
small payment institution’ set out in Regulation 13 of the PSRs because of DCR’s
failure to respond to the FSA and provide the necessary information requested to enable
the FSA to determine the application.

The Payment Services Regulations 2009

2.5. Regulation 12(1) requires an application for registration as a small payment institution
to contain, or be accompanied by, such information as the FSA may reasonably require.

2.6. Regulation 12(4) states that at any time after receiving an application and before
determining it, the FSA may require the applicant to provide it with such further
information as it reasonably considers necessary to enable it to determine the
application.

2.7. Regulation 13(1) states that the FSA may refuse to register an applicant as a small
payment institution only if any of the conditions set out in paragraphs (2) to (6) are not
met.

2.8. One of those conditions, set out in Regulation 13(2), is that the application must
comply with the requirements of, and any requirements imposed under, regulation 12.

2.9. Regulation 9(2) states that the FSA may determine an incomplete application if it
considers it appropriate to do so.

“The FSA’s role under the Payment Services Regulations 2009 – Our approach”

2.10. In exercising its powers in relation to the approval of an application for registration as a
small payment institution, the FSA must have regard to guidance published in the
FSA’s ‘Our approach’ document, including the section titled ‘Authorisation and
registration’.

2.11. The paragraphs relevant to the proposal to refuse the Application are set out below.

2.12. Paragraph 3.97: the FSA has to make a decision on a complete application within
three months of receiving it. An application is complete when the FSA has received all
the information and evidence needed for it to make a decision. The FSA will let the
applicant know if it needs more information.

2.13. Paragraph 3.98: in the case of an incomplete application, the FSA must make a
decision within 12 months of receipt. However, if that date is reached and discussions
with an applicant have not resulted in the FSA receiving all the information it needs to
make its decision, it is likely that the incomplete application will result in a refusal.
This is because it is unlikely that the FSA will have been able to satisfy itself that the
applicant has met the authorisation/registration requirements.

2.14. Paragraph 3.105: the FSA can refuse an application when the information and
evidence provided does not satisfy the requirements of the PSRs. When this happens
the FSA is required to give the applicant a Warning Notice setting out the reason for
refusing the application and allowing 28 days to make a representation on the decision.

Facts and Matters Relied Upon

2.15. The Application was received on 4 May 2010.

2.16. The FSA made a request for further information from DCR on 7 July 2010 in order to
enable it to determine the Application, but received no response from DCR.

2.17. Details of all the communications between the FSA’s Authorisations Division and DCR
are set out below:

(a)
On 7 July 2010, the Authorisations Division sent an email to DCR containing
substantive questions resulting from the Application. No response was
received.

(b)
On 29 December 2010, the Authorisations Division sent an additional email to
DCR detailing the missing information and indicating that, in the absence of a
full response to this or subsequent attempts to contact DCR, the FSA would be
minded to refuse DCR’s application and issue a Warning Notice. A copy of
the email dated 7 July 2010 was attached.

(c)
On 9 March 2011, the Authorisations Division sent a letter to DCR by special
delivery to the address provided to the FSA in the Application. The letter
stated that the information requested on 7 July 2010 remained outstanding, and
that without a full response the FSA would be minded to refuse the
Application in the absence of the information required in order to determine
the application. No response was received.

(d)
The Authorisations Division telephoned DCR on 9 March 2011 using the
Canadian number provided in the Application. This number was an automated
service without answer machine. The Authorisations Division was unable to
trace the director named in the Application from the company directory.

(e)
On 23 March 2011, the Authorisations Division sent a further email to DCR,
again detailing the missing information and indicating that without a full
response the FSA would refuse DCR’s application and issue a Warning
Notice, on the grounds that it had failed to provide the information needed for
the FSA to determine the application. No response was received.

3.
CONCLUSIONS

3.1. Pursuant to Regulation 13(1) the FSA may refuse an application for registration as a
small payment institution only if any of the conditions in paragraphs (2) to (6) of
Regulation 13 are not met. The FSA is of the view that Regulations 13(1) and 13(2) are
not met.

3.2. Regulation 13(1) states that the FSA may refuse to register an applicant as a small
payment institution only if any of the conditions set out in paragraphs (2) to (6) are not
met.

3.3. Regulation 13(2) states that the application must comply with the requirements of, and
any requirements imposed under, Regulation 12.

3.4. Regulation 12(1) requires an application for registration as a small payment institution
to contain, or be accompanied by, such information as the FSA may reasonably require.

3.5. On the basis of the facts and matters described above, the FSA has therefore concluded
that DCR does not satisfy and will continue not to satisfy, the ‘Conditions for
authorisation as a payment institution’ (Regulation 13) in relation to all of the payment
services for which DCR would have permission if the application was granted.

4.
DECISION MAKER

4.1. The decision which gave rise to the obligation to give this Final Notice was made by
Mary O’Connor, Head of Department in the Authorisations Division on behalf of the
Regulatory Transactions Committee ("RTC"), in accordance with the provisions on
"non-responder" cases as set out in the terms of reference of that Committee.

5.
IMPORTANT NOTICES

5.1. Schedule 5, paragraph 7 of the PSRs applies certain provisions of the Financial
Services and Markets Act (“the Act”). This Final Notice is therefore issued pursuant to
paragraph 7 of Schedule 5 of the PSRs and section 390(1) of the Act.

5.2. Pursuant to paragraph 7 of Schedule 5 of the PSRs, 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 FSA must publish such information about
the matter to which the Final Notice relates as the FSA considers appropriate, and in
such manner as the FSA considers appropriate. However, the FSA may not publish
information if such publication would, in the opinion of the FSA, be unfair to DCR or
prejudicial to the interests of consumers.

5.3. The FSA intends to publish such information about the matter to which this Final
Notice relates as it considers appropriate.

FSA contacts

5.4. For more information concerning this matter generally, please contact Jonathan
Bromberger, Manager, non-FSMA Team at the FSA (direct line 020 7066 9080 / email:
jonathan.bromberger@fsa.gov.uk)

Mary O’Connor
on behalf of the Regulatory Transactions Committee