FINAL NOTICE

ACTION

1. For the reasons given in this notice, the Authority has refused the Application
made by Debt Plan UK (‘DPUK’) for authorisation to carry on the regulated
activities of debt adjusting, debt counselling, debt administration, credit
information services, and credit brokerage.

SUMMARY

1.
On 29 November 2011 DPUK applied to the OFT for a consumer credit licence.

2.
The OFT gave DPUK notice, dated 19 March 2014, of its determination to refuse
the Application on the basis that, for each of the reasons set out below, DPUK
was not fit to hold such a licence.

3.
On 1 April 2014 statutory responsibility for consumer credit regulation transferred
from the OFT to the Authority, subject to the terms of the Transitional Order, as
defined below.

4.
By virtue of the Transitional Order, DPUK not already having any permission
under Part 4A of the Act, the OFT’s notice of determination is, since 1 April 2014,
to be treated as a notice given by the Authority under section 55X(4) of the Act of
its decision to refuse the Application as though it had been an application by
DPUK for such permission.

5.
DPUK has not appealed the OFT’s notice and the period during which it could have
done so has now expired.

DEFINITIONS

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

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

“the Application” means DPUK’s application to the OFT for a consumer credit
licence dated 29 November 2011.

“the Authority” means the body corporate previously known as the Financial
Services Authority and renamed on 1 April 2013 as the Financial Conduct
Authority

“DPUK” means the applicant, Debt Plan UK Limited

The “OFT” means the body that before 1 April 2014 was known as The Office Of
Fair Trading

“the Transitional Order” means The Financial Services and Markets Act 2000
(Regulated Activities) (Amendment) (No.2) Order 2013

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

REASONS AND IMPACT ON FITNESS

7. The regulatory and statutory provisions relevant to this final notice are referred to
in Annex A.

8. The Authority cannot be satisfied that DPUK is fit to be authorised under Part 4A
of the Act to carry on the regulated activities to which the Application relates for
the following reasons:

(1)
DPUK has insufficient and inadequate skills and experience in the areas in
which it has sought a licence. DPUK has no staff other than Nigel Stirk, the
director of DPUK. Mr Stirk accepted that he had no experience in the area
of debt management and had undertaken only basic training in the subject
matter on a course held over the two days immediately prior to the
hearing. He acknowledged that he required significant further training in
the area of debt management before the company could begin to trade, as
would any staff he intended to hire. He indicated that he was unwilling to
invest in, or undertake any further training himself, thereby incurring
further expenditure, until DPUK had successfully obtained a consumer
credit licence.

(2)
Mr Stirk had identified an individual who could act as compliance officer for
DPUK who had no debt management experience and an experienced debt
management professional who would act as a manager. Mr Stirk indicated
that he was unwilling to employ these individuals, thereby incurring further
expenditure, until DPUK had successfully obtained a consumer credit
licence. In any event, the proposed individuals also lacked the necessary
skills and experience relevant to the type of licence sought.

(3)
DPUK significantly altered its business model following the receipt of a list
of OFT concerns surrounding its fitness to hold a licence. Instead of acting
as a debt management company, as initially proposed, DPUK proposed
that it would act as a referral service for the first 12 months before
ultimately moving into the debt management business once the necessary
skills and experience had been obtained. Notwithstanding the scaling-back
of the business model, DPUK did not scale-back the number of categories
for which it sought a consumer credit licence. In fact, DPUK requested
licencing in further categories as a “precautionary measure”, in case DPUK
wanted to expand its areas of business in the future. Whilst Mr Stirk told
the OFT Adjudicator that DPUK would not revert to the old business model,
he conceded that there would be nothing preventing this from happening
once a licence had been granted.

(4)
DPUK was unable to produce written compliance policies and procedures
relating to key areas such as data protection and complaints handling that
that were relevant to the firm in its current form. Instead, documents were
provided that were incomplete, future-looking and included statements
that were not relevant to a non-trading firm. The Data Protection Officer
listed in the data protection policy (Mr Stirk) did not know the detail of the
policy or the substance of how it would operate.

9. DPUK intended to operate in an industry where consumers affected are often
particularly vulnerable. The risk of long term detriment to vulnerable consumers
is amplified where a business of this type fails to meet the required regulatory
standards. DPUK’s failure to demonstrate that it had individuals with the relevant
skills and experience, as well as its failure to implement a suitable business
model, made clear that authorising DPUK would present an unacceptable risk to
consumers.

IMPORTANT NOTICES

10. This final notice is given under section 390(1) of the Act.

11. Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of
information about the matter to which this notice relates. Under those provisions,
the Authority must publish such information about the matter to which this notice
relates as the Authority considers appropriate. The information may be published
in such manner as the Authority considers appropriate. However, the Authority
may not publish information if such publication would, in the opinion of the
Authority, be unfair to you or prejudicial to the interests of consumers or
detrimental to the stability of the UK financial system.

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

Authority contacts

For more information concerning this matter generally, contact Keith Cooper,
Manager, Debt, Credit & Regulatory Permissions Department at the Authority (direct
line: 020 7066 7466 / email: keith.cooper@fca.org.uk).

Nicholas Mears
Head of Department
Authorisations Division
The Financial Conduct Authority

ANNEX A – REGULATORY PROVISIONS RELEVANT TO THIS WARNING NOTICE

1.
The OFT was required, by section 25 of the CCA, which section was also repealed
by the Transitional Order with effect from 1 April 2014, to be satisfied, before
issuing a consumer credit licence of the type applied for by Debt Plan UK, that the
applicant was fit to hold it, having regard, among other factors, to whether any of
the applicant’s agents, associates and/or controllers had committed any offence
involving fraud and/or had contravened the CCA itself.

2.
The Authority is required, by section 55B(3) of the Act, before giving permission
under Part 4A of the Act to any person, to ensure that that person will satisfy and
continue to satisfy, in relation to all of the regulated activities for which the
person will have permission, the relevant threshold conditions set out in Schedule
6 to the Act.

3.
Paragraph 2E of Schedule 6 to the Act requires, specifically, as one of those
conditions, that the Authority should ensure that each such applicant is fit and
proper.

4.
Paragraph 2E further provides that the Authority is to consider in this regard:

(1)
the applicant’s connections with other persons;

(2)
the need to ensure that the applicant’s affairs are conducted in an
appropriate manner, having regard in particular to the interests of
consumers and the integrity of the UK financial system;

(3)
whether the applicant has complied with requirements imposed by the
Authority, or requests made by the Authority, relating to the provision of
information to the Authority;

(4)
whether those who manage the applicant’s affairs have acted and may be
expected to act with probity; and

(5)
the need to minimise the extent to which it is possible for the business
carried on or to be carried on by the applicant to be used for a purpose
connected with financial crime.

Relevant provisions of the Transitional Order

5. In respect of any application for a consumer credit licence of the type applied for
by DPUK, if determined by the OFT before 1 April 2014, in relation to which the
appeal period had not ended by that date and where the applicant does not have
an existing permission under Part 4A of the Act:

(1)
paragraph 32(2)(a) of the Transitional Order provides that the OFT’s
notice of determination is to be treated as a decision notice given under
section 55X(4) of the Act by the Authority of its decision to refuse an
application for Part 4A permission; and

(2)
paragraph 32(4) of the Transitional Order provides that the notice has
effect subject to any necessary modifications.

Relevant provisions of the Authority’s Handbook

6. In exercising its powers in relation to the granting of a Part 4A permission, the
Authority must have regard to guidance published in the Authority Handbook,
including the part titled Threshold Conditions (“COND”). The considerations in
relation to the decision made in respect of DPUK’S application are set out below.

Threshold condition 2D: Appropriate Resources

7. COND 1.3.2G(2) states that, in relation to threshold conditions 2D to 2F, the
Authority will consider whether a firm is ready, willing and organised to comply
on a continuing basis with the requirements and standards under the regulatory
system which will apply to the firm if it is granted Part 4A permission.

8. COND 2.4.2G(2) states that the FCA will interpret the term 'appropriate' as
meaning sufficient in terms of quantity, quality and availability, and 'resources' as
including all financial resources (though only in the case of firms not carrying on,
or seeking to carry on, a PRA-regulated activity), non-financial resources and
means of managing its resources; for example, capital, provisions against
liabilities, holdings of or access to cash and other liquid assets, human resources
and effective means by which to manage risks.

9. COND 2.4.4G states that, when assessing whether a firm has appropriate
resources, the Authority will have regard to matters including:

(a) the nature and scale of the business carried on, or to be carried on, by A;

(b) the risks to the continuity of the services provided by, or to be provided
by, A

Threshold condition 2E: Suitability

10. COND 2.5.2G(2) states that the FCA will also take into consideration anything
that could influence a firm's continuing ability to satisfy the threshold conditions
set out in paragraphs 2E and 3D of Schedule 6 to the Act. Examples include the
firm's plans to seek to vary its Part 4A permission to carry on additional regulated
activities once it has been granted that permission.

11. COND 1.3.3BG provides that, in determining whether the firm will satisfy, and
continue to satisfy, the FCA threshold conditions, the FCA will have regard to all
relevant matters, whether arising in the United Kingdom or elsewhere.