FIRST SUPERVISORY NOTICE

ACTION

1.
For the reasons given in this Notice and pursuant to section 55J of the Act, the
Authority has decided to vary the permission granted to P.F. (International)
Limited (“the Firm”) with immediate effect by removing the following regulated
activities:

a)
Agreeing to carry on a regulated activity;

b)
Credit broking; and

c)
Entering into regulated credit agreements as lender (excluding high-cost
short-term credit, bill of sale agreements, and home collected credit
agreements).

2

2.
For the reasons given in this Notice and pursuant to section 55J of the Act, the
Authority proposes to vary the permission granted to the Firm with effect from 1
November 2018 by removing the regulated activity of exercising / having the right
to exercise lender’s rights and duties under a regulated credit agreement
(excluding high-cost short-term credit, bill of sale agreements, and home collected
credit agreements).

3.
For the reasons given in this Notice, and pursuant to section 55L of the Act, the
Authority has decided to impose the following requirements on the Firm:

a)
The Firm must, if it proposes to sell its loan book to any third party, disclose
the potential purchaser to the Authority at least 4 weeks prior to any sale;

b)
The Firm must by 7 August 2018 at the latest, send the Authority a draft
letter, which it proposes to send to each of its existing customers to whom
it has lent funds and from whom funds remain outstanding under regulated
agreements (“Existing Customers”), explaining to them the existence and:

i) effect of this First Supervisory Notice; and

ii) nature of the rights they have under the law.

Within 5 working days of the Authority agreeing the content of the letter,
the Firm must then send it to its Existing Customers; and

c)
The Firm must supply the Authority with a list of the Existing Customers by
7 August 2018 at the latest.

REASONS FOR ACTION


4.
On the basis of the facts and matters described in this Notice, the Authority is
taking the action set out in paragraphs 1 to 3, for the following reasons:

a)
The Authority considers that the Firm is failing to satisfy the threshold
condition set out in paragraph 2E (suitability) of Schedule 6 to the Act; and

b)
The Authority considers that it is desirable to do so in order to advance the
Authority’s consumer protection objective (set out in section 1C of the Act).

DEFINITIONS

5.
The definitions below are used in this Notice:

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

“the Authority” means the Financial Conduct Authority;

“the First-Tier Tribunal” means the First-Tier Tribunal (Consumer Credit) General
Regulatory Chamber;

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

3

“the OFT” means the Office of Fair Trading;

“the Requirement” means the requirement on the Firm’s permissions which states:
‘the Firm is not permitted to canvass regulated borrower-lender-supplier
agreements or regulated consumer hire agreements off trade premises’;

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

“X Ltd” means the company (whose name has been anonymised) with substantial
connections to the Firm described in paragraph 20.

FACTS AND MATTERS RELIED ON

Background

6.
The Firm is a small business based in Bristol and its business model includes selling
premium vacuum cleaners door to door. Customers can purchase the cleaners by
cash or on credit. The credit is supplied directly by the Firm. Historically, the Firm
would sometimes broker that credit to another lender.

7.
On 1 October 2015, the Firm was authorised to conduct the following activities:

a)
Agreeing to carry on a regulated activity;

b)
Credit broking;

c)
Entering into a regulated credit agreement as lender (excluding high-cost
short-term credit, bill of sale agreements, and home collected credit
agreements); and

d)
Exercising/having the right to exercise the lender’s rights and duties under
a regulated credit agreement (excluding high-cost short-term credit, bill of
sale agreements, and home collected credit agreements).

Failings

Canvassing Off Trade Premises

8.
On 1 October 2015 (when the Firm was authorised), the Authority imposed the
Requirement on the Firm. The Requirement states that the Firm is not permitted
to canvass regulated borrower-lender-supplier agreements or regulated consumer
hire agreements off trade premises.

9.
The Firm has been trading in breach of this requirement from the time of its
authorisation by attending the homes of consumers, without a prior appointment,
with a view to persuading them to enter into credit agreements in order to
purchase vacuum cleaners.

Affordability checks

10.
It appears to the Authority that the Firm has entered into consumer credit
agreements without conducting adequate creditworthiness assessments, as it is
required to do under CONC 5.2.1(R). For example:

a)
On at least two occasions, the Firm entered into a consumer credit
agreement despite being told by the customers that they could not afford
the credit (for example, because they were unemployed); and

b)
On a separate occasion, a consumer credit agreement caused a customer’s
bank account to become overdrawn and certain bills to go unpaid.

11.
Principle 6 requires the Firm to pay due regard to the interests of its customers
and to treat them fairly. CONC 2.2.2(G) provides some examples of behaviour
which is likely to contravene Principle 6. These examples include “targeting
customers with regulated credit agreements which are unsuitable for them, by
virtue of their indebtedness, poor credit history, age, health, disability or any other
reason” and “subjecting customers to high-pressure selling, aggressive or
oppressive behaviour, or unfair coercion”.

12.
The Authority considers that the Firm’s sales practices are in contravention of
Principle 6. The Authority has seen evidence that the Firm has engaged in some
of the following practices:

a)
Targeting customers with credit agreements which are unsuitable for them,
by virtue of their age, poor credit history, indebtedness or disability; and

b)
Subjecting customers to high pressure selling, aggressive or oppressive
behaviour.

13.
For example, on one occasion, the Firm’s representative remained at the home of
a consumer who, on the day of the visit, had received news that a close relative
had passed away that day. Despite being asked to leave by the customer on more
than one occasion, the Firm’s representative remained on the premises for
approximately three hours and as a result, the customer entered into a consumer
credit agreement for the purchase of a new vacuum cleaner so that the
representative would leave her home.

14.
On another occasion, the Firm entered into a credit agreement with a 78 year old
man with reading difficulties in order to facilitate the purchase of a vacuum
cleaner. The customer had already bought two vacuum cleaners on credit and
spent thousands of pounds on servicing them over the previous six years. The
credit agreement put the customer under financial stress and he was unable to
explain the payments coming from his bank accounts.

Misleading the Authority

15.
The Authority has been misled by the Firm on a number of occasions:

5

a)
On 9 August 2017, the Firm stated to the Authority that “we believed we
did have permission to canvass off trade premises”. However, given
previous correspondence between the Firm and the Authority, the Authority
considers that the Firm could not have reasonably believed that it had the
right to canvass off trade premises. In particular, when the Firm initially
submitted its application for authorisation, the Authority sought
clarification from the Firm as to its business model and was told by the Firm
that it would not be canvassing off trade premises. Accordingly, the
Authority granted the Authorisation with the Requirement in place.

b)
On 9 August 2017, in support of the statement at paragraph 15(a), the
Firm told the Authority that it had permission to canvass off trade premises
whilst it was licensed by the OFT. However, correspondence between the
Firm and the OFT shows that the Firm, having requested permission to
canvass off trade premises in its application, was told by the OFT that a
licence would not be granted on those terms. The Firm withdrew its request
and was granted a licence without such permission. Accordingly, the
Authority considers that the Firm must have known in August 2017 that it
did not have permission to canvass off trade premises whilst licensed by
the OFT.

c)
On 22 January 2018, the Firm stated that it only canvassed off trade
premises for business brokered to another lender. However, witness
statements provided by the Firm’s customers show that the Firm entered
into consumer credit agreements where it was the lender.

d)
On 2 August 2017, in an application for a variation of permission to enable
it to canvass off trade premises, the Firm represented to the Authority that
it had not completed any credit agreements which would have required the
permission which was being sought in the application. In fact, as the Firm
must have known, it had entered into many such agreements.

Failure to be open and cooperative with the Authority

16.
Principle 11 requires a firm to be open and cooperative in its dealings with the
Authority and chapter 15 of SUP includes detailed rules and guidance on
information that firms should provide to the Authority.

Failure to notify the Authority of an investigation by another regulatory authority

17.
SUP 15.3.15(R) requires a firm to notify the Authority of disciplinary measures or
sanctions that have been imposed by any statutory or regulatory authority,
competition authority, professional organisation or trade body (other than the
Authority) or when the firm becomes aware that one of those bodies has started
an investigation into its affairs. The Firm is under investigation by another
regulatory authority in respect of the way that it conducts its business, and
discovered that it was under investigation in March 2017, but failed to notify the
Authority of this investigation.

Failure to inform the Authority it was breaching its requirement not to canvass off trade premises

18.
On 19 June 2017, the Firm began drafting an application on the Authority’s
authorisation system to remove the requirement not to canvass off trade

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premises. The Firm therefore must have known that it was subject to this
requirement. The Firm had been canvassing off trade premises while the
requirement was in place, and breached Principle 11 by failing to notify the
Authority that it was in breach of the requirement.

Unreliability of Firm’s claims

19.
The Firm has been unreliable in its dealings with the Authority. In particular:

a)
The Firm indicated as early as 22 January 2018 that it no longer requires
the permission to broker credit and that it was willing to cede this
permission. However, as at 31 July 2018, it has not applied to the Authority
to do so. This is despite having been invited by the Authority to submit the
necessary application, and having been chased by the Authority on 26 April
2018, 16 May 2018 and 6 June 2018.

b)
The Firm also indicated on 22 January 2018 that it intended to wind down
its business and would surrender its permission when that was done, which
at the time of writing was anticipated to be June/July 2018. The Firm has
not applied to cancel its permission and nor has it informed the Authority
of its intentions going forward.

c)
Upon learning that the Firm intended to wind its business down, the
Authority
sought
clarification
of
various
matters
concerning
the
consequences of doing so on 13 March 2018. The Firm was set a deadline
of 16 March 2018 to respond. The answers given by the Firm were
inadequate and further clarification was sought on 16 May 2018, with a
deadline of 18 May 2018. That correspondence remains unanswered as of
31 July 2018.

The Firm’s connection to unfit persons

20.
The Firm is connected to a number of unfit persons; X Ltd, and two individuals
connected to X Ltd. The Firm has a financial connection to X Ltd, one of the
individuals is the ultimate controller of X Ltd, and the other individual has carried
out sales for both the Firm and X Ltd. Prior to October 2012, X Ltd operated a
similar business model to the Firm. A key similarity was the sale of the same
premium brand vacuum cleaners on credit. The OFT, which licensed X Ltd,
determined that it was unfit and that its licence should be revoked. On referral to
the First-Tier Tribunal, the decision was upheld. In the course of that decision, the
First-Tier Tribunal also found that one individual connected to X Ltd (its ultimate
controller) was unfit and that another had engaged in unfair business practices.

21.
The Firm’s substantial connections to X Ltd and the two individuals referred to
above, as well as the findings of the OFT and the First-Tier Tribunal, call into
question whether the Firm is fit and proper. This is particularly the case given that
the Firm is carrying on substantially the same business model as that operated by
X Ltd, and the Authority considers that the ultimate controller of X Ltd is also the
ultimate controller of the Firm.

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22.
On the basis of the facts and matters set out above, the Authority considers that
the Firm is not fit and proper having regard to all the circumstances. As a result,
it appears to the Authority that the Firm is failing to satisfy the threshold condition
in paragraph 2E of Schedule 6 to the Act (suitability).

23.
In addition, the Authority considers that consumers are likely to continue to be
harmed by the Firm’s practices if it is permitted to continue trading with the same
permissions. Accordingly, the Authority considers that the action in paragraphs 1
to 3 of this Notice is appropriate and proportionate in order to advance its
consumer protection objective.

24.
The Authority, having regard to the grounds for taking the action set out in
paragraphs 1 to 3 of this Notice, reasonably considers it necessary that:

a)
the action set out in paragraphs 1 and 3 takes effect immediately; and

b)
the action proposed in paragraph 2 takes effect on 1 November 2018.

PROCEDURAL MATTERS

25.
This First Supervisory Notice is given to the Firm under section 55Y(4) of the Act,
and in accordance with section 55Y(5) of the Act.

26.
The following paragraphs are important.

Decision Maker

27.
The decision which gave rise to the obligation to give this First Supervisory Notice
was made by the Regulatory Decisions Committee.

The Tribunal

28.
The Firm has the right to refer the matter to which this First Supervisory Notice
relates to the Tribunal. Under paragraph 2(2) of Schedule 3 of the Tribunal
Procedure (Upper Tribunal) Rules 2008, the Firm has 28 days from the date on
which this First Supervisory Notice is given to it to refer the matter to the Upper
Tribunal.

29.
A reference to the Tribunal can be made by way of a signed reference notice (Form
FTC3) and filed with a copy of this First Supervisory Notice. The Tribunal’s contact
details are: The Upper Tribunal, Tax and Chancery Chamber, Fifth Floor, Rolls
Building, Fetter Lane, London, EC4A 1NL (telephone: 020 7612 9730; email:
uttc@hmcts.gsi.gov.uk).

30.
For further information on the Upper Tribunal (including the power to vary time
periods) you should refer to the HM Courts and Tribunals Service website which
will provide guidance and the relevant form to complete. The relevant page on the
HM Courts and Tribunals Service website can be accessed via the following link:

31.
A copy of Form FTC3 must also be sent to Rory Neary at the Authority, 25 The
North Colonnade, Canary Wharf, London E14 5HS at the same time as filing a
reference with the Upper Tribunal.

Representations

32.
The Firm has the right to make written and oral representations to the Authority
(whether or not it refers this matter to the Tribunal). The deadline for providing
written representations and/or notifying the Authority that the Firm wishes to
make oral representations is 16 August 2018, or such later date as may be
permitted by the Authority. The address for doing so is:

Lynn Cheesman
Decision-Making Committees Secretariat
Financial Conduct Authority
12 Endeavour Square
London
E20 1JN


Publicity

33.
The Firm should note that section 391 of the Act requires the Authority, when this
Notice takes effect, to publish such information about the matter as it considers
appropriate.

Contacts

34.
For more information concerning this matter generally, the Firm should contact
Rory Neary at the Authority (direct line: 020 7066 7972).

35.
If the Firm has any questions regarding the procedures of the Regulatory Decisions
Committee, it should contact Lynn Cheesman (direct line: 020 7066 3192).

Tim Parkes
Chair, Regulatory Decisions Committee

ANNEX

RELEVANT STATUTORY PROVISIONS

1.
The Authority’s operational objectives are set out in section 1B of the Act and include
securing an appropriate degree of protection for consumers (section 1C).

2.
Section 55J of the Act allows the Authority to remove a regulated activity from those to
which an authorised person’s Part 4A permission relates where it is desirable to do so in
order to advance one or more of the Authority’s operational objectives (section 55J(1)(c))
or where a firm is failing, or is likely to fail, to satisfy the threshold conditions for which
the Authority is responsible (section 55J(1)(a)).

3.
Section 55L of the Act allows the Authority to impose a requirement on an authorised
person with a Part 4A permission where it is desirable to do so in order to advance one
or more of the Authority’s operational objectives (section 55L(2)(c) or where a firm is
failing, or is likely to fail, to satisfy the threshold conditions for which the Authority is
responsible (section 55L(2)(a)).

4.
Section 55Y of the Act allows a requirement or variation imposed under the own-initiative
requirement power or own initiative variation power to take effect immediately (or on a
specified date) only if the Authority, having regard to the ground on which it is exercising
its own-initiative power, reasonably considers that it is necessary for the requirement to
take effect immediately (or on that date).

5.
Section 391 of the Act provides that:

(5) When a supervisory notice takes effect, the [Authority] must publish such
information about the matter to which the notice relates as it considers appropriate.
[…]

(6) The [Authority] may not publish information under this section if in its opinion,
publication of the information would be—

(a) unfair to the person with respect to whom the action was taken or proposed to
be taken,

(b) prejudicial to the interests of consumers […]

(7) Information is to be published under this section in such manner as the
[Authority] considers appropriate.”

6.
Paragraph 2E to Schedule 6 to the Act states that:

“A must be a fit and proper person having regard to all the circumstances, including-

(c) the need to ensure that A’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;

(d) whether A has complied and is complying with requirements imposed by the
[Authority] in the exercise of its functions, or requests made by the [Authority],
relating to the provision of information to the [Authority] and, where A has so
complied or is so complying, the manner of that compliance;

(e) whether those who manage A’s affairs have adequate skills and experience and
have acted and may be expected to act with probity;

(f) whether A’s business is being, or is to be, managed in such a way as to ensure
that its affairs will be conducted in a sound and prudent manner”;

[…].”

RELEVANT HANDBOOK PROVISIONS

7.
In exercising its power to impose requirements or variations of permission, the Authority
must have regard to guidance published in the Handbook. The relevant main
considerations in relation to the action specified above are set out below.

Guidance concerning the relevant threshold conditions

8.
Guidance on the threshold conditions is set out in the part of the Handbook entitled
threshold conditions (“COND”).

COND 2.5 – Suitability: Paragraph 2E of Schedule 6 to the Act

9.
COND 2.5.1A(1) reproduces paragraph 2E of Schedule 6 to the Act (“the Suitability
Threshold Condition”) (as set out in part above).

10.
COND 2.5.3G(1) states that the Authority may consider that a firm is not suitable because
of doubts over the individual or collective suitability of persons connected with the firm.

11.
COND 2.5.4G(2) provides examples of general considerations to which the Authority may
have regard in assessing whether a firm will satisfy and continue to satisfy the Suitability
Threshold Condition.

12.
COND 2.5.6G provides that the Authority may have regard when assessing whether a
firm will satisfy, and will continue to satisfy the threshold conditions, to whether the firm
has been open and co-operative in all of its dealings with the Authority and is ready,
willing and organised to comply with the requirements and standards under the
regulatory system.


CONC – Consumer Credit Sourcebook

13.
CONC 2.2.2G sets out a number of examples of behaviour by or on behalf of a firm which
the Authority considers is likely to contravene Principle 6 including:

“(1) targeting customers with regulated credit agreements which are unsuitable for them,
by virtue of their indebtedness, poor credit history, age, health, disability or any other

reason;

(2) subjecting customers to high-pressure selling, aggressive or oppressive behaviour,
or unfair coercion.”

14.
CONC 5.2.1R requires firms to carry out adequate creditworthiness assessments prior to
lending and lists factors which firms must consider.

PRIN – Principles for Businesses

15.
PRIN 1.1.2G states that the Principles are a general statement of the fundamental
obligations of firms under the regulatory system. PRIN includes:

Principle 6 - “A firm must pay due regard to the interests of its customers and
treat them fairly”; and

Principle 11 - “A firm must deal with its regulators in an open and cooperative
way, and must disclose to the [Authority] appropriately anything relating to the
firm of which that regulator would reasonably expect notice”.

SUP – Supervision

16.
Chapter 15 of SUP includes detailed rules and guidance on information that firms should
provide in order to comply with Principle 11.

17.
SUP 15.3.15R(3) provides that a firm must notify the Authority immediately if measures
or sanctions have been imposed on the firm by any statutory or regulatory authority,
competition
authority, professional
organisation
or
trade
body
(other
than
the Authority) or the firm becomes aware that one of those bodies has started an
investigation into its affairs.

OTHER RELEVANT REGULATORY PROVISIONS

18.
The Authority's policy in relation to its enforcement powers is set out in the Enforcement
Guide (EG), certain provisions of which are summarised below.

19.
EG 8.1 reflects the provisions of sections 55J and 55L of the Act that the Authority may
use its power to vary an authorised person’s Part 4A permission or impose a requirement
where a firm is failing or is likely to fail to satisfy the threshold conditions (EG 8.1(1));
or where it is desirable to exercise the power in order to advance one or more of its
operational objectives (EG 8.1(3)).

Imposing requirements on the Authority’s own-initiative

20.
EG 8.2.1 provides that the Authority will have regard to its statutory objectives and the
range of regulatory tools that are available to it, when it considers how it should deal
with a concern about a firm. The Authority will also have regard to: (1) the responsibilities
of a firm's management to deal with concerns about the firm or about the way its business
is being or has been run; and (2) the principle that a restriction imposed on a firm should
be proportionate to the objectives the Authority is seeking to achieve.

21.
EG 8.2.3 provides that the Authority will exercise its formal powers under section 55J or
55L of the Act, where the Authority considers it is appropriate to ensure a firm meets its

regulatory requirements. EG 8.2.3(1) and (2) specifies that the Authority may consider
it appropriate to exercise its powers where it has serious concerns about a firm or the
way its business is being or has been conducted and it is concerned that the consequences
of a firm not taking the desired steps may be serious. EG 8.2.6 gives examples of the
circumstances in which the Authority will consider varying a firm’s Part 4A permission
because it has serious concerns about a firm, or about the way its business is being or
has been conducted. These include:

“(1) in relation to the grounds for exercising the power under section 55J(1)(a) or
section 55L(2)(a) of the Act, the firm appears to be failing, or appears likely to fail,
to satisfy the threshold conditions relating to one or more, or all, of its regulated
activities, because for instance:

(b) the firm appears not to be a fit and proper person to carry on a regulated
activity because:

(iii) it has breached requirements imposed on it by or under the Act (including the
Principles and the rules), for example in respect of its disclosure or notification
requirements, and the breaches are material in number or in individual seriousness;

22.
EG 8.4 states examples of requirements that the Authority may consider imposing when
exercising its own-initiative power in support of its enforcement function. These include
a requirement that prohibits the disposal of, or other dealing with, any of the firm’s assets
or restricts those disposals or dealings (EG 8.4.4).

23.
EG 8.5 states the circumstances in which the Authority will consider cancelling a firm’s
Part 4A permission using its own initial powers contained in sections 55J and 55Q
respectively of the Act. These include where the Authority has very serious concerns
about a firm or the way its business is or has been conducted (EG 8.5.1(1)).

24.
EG 8.5.1 states examples of the types of circumstances in which the Authority may cancel
a firm’s Part 4A permission. These include repeated failures to comply with rules and
requirements (EG 8.5.2(7); a failure to co-operate with the Authority which is of sufficient
seriousness that the Authority ceases to be satisfied that the firm is fit and proper, for
example failing to provide material information or take remedial action reasonably
required by the Authority (EG 8.5.2(8)(b)).

25.
EG 8.5.4 states that where the situation is so urgent and serious that the firm should
immediately cease to carry on all regulated activities, the Authority may first vary the
firm's Part 4A permission so that there is no longer any regulated activity for which the
firm has a Part 4A permission. If it does this, the Authority will then have a duty to cancel
the firm's Part 4A permission - once it is satisfied that it is no longer necessary to keep
the Part 4A permission in force.

26.
EG 8.5.5 states the Authority may decide to keep a firm's Part 4A permission in force to
maintain the firm's status as an authorised person to use administrative enforcement
powers against the firm.

Use of the own-initiative powers in urgent cases

27.
EG 8.3.1 states that the Authority may impose a requirement so that it takes effect
immediately or on a specified date if it reasonably considers it necessary for the
requirement to take effect immediately (or on the date specified), having regard to the
ground on which it is exercising its own-initiative powers.

28.
EG 8.3.2 provides the circumstances in which the Authority will consider exercising its
own initiative power as a matter of urgency. These include where the information
available to it indicates serious concerns about the firm or its business that need to be
addressed immediately and circumstances indicate that it is appropriate to use statutory
powers immediately to require and/or prohibit certain actions by the firm in order to
ensure the firm addresses these concerns.

29.
EG 8.3.3 sets out a non-exhaustive list of situations which the Authority will consider in
exercising its own-initiative power as a matter of urgency. These include:

“(1) information indicating significant loss, risk of loss or other adverse effects for
consumers, where action is necessary to protect their interests;

(3) evidence that the firm has submitted to the [Authority] inaccurate or misleading
information so that the [Authority] becomes seriously concerned about the firm's
ability to meet its regulatory obligations;

(4) circumstances suggesting a serious problem within a firm or with a firm’s
controllers that calls into question the firm’s ability to continue to meet the threshold
conditions.”

30.
EG 8.3.4 states that the Authority will consider the full circumstances of each case when
it decides whether an urgent imposition of a requirement is appropriate and sets out a
non-exhaustive list of factors which will determine whether the urgent exercise of the
Authority’s own-initiative power is an appropriate response to serious concerns,
including:

“(1) The extent of any loss, or risk of loss, or other adverse effect on consumers.
The more serious the loss or potential loss or other adverse effect, the more likely
it is that the [Authority]’s urgent exercise of own-initiative powers will be
appropriate, to protect the consumers' interests.

(3) The nature and extent of any false or inaccurate information provided by the
firm. Whether false or inaccurate information warrants the [Authority]’s urgent
exercise of its own-initiative powers will depend on matters such as:

(a) the impact of the information on the [Authority]’s view of the firm's compliance
with the regulatory requirements to which it is subject, the firm's suitability to
conduct regulated activities, or the likelihood that the firm's business may be being
used in connection with financial crime;

(b) whether the information appears to have been provided in an attempt
knowingly to mislead the [Authority], rather than through inadvertence;

(c) whether the matters to which false or inaccurate information relates indicate
there is a risk to customer assets or to the other interests of the firm's actual or
potential customers.

(4) The seriousness of any suspected breach of the requirements of the legislation
or the rules and the steps that need to be taken to correct that breach.

(5) The financial resources of the firm. Serious concerns may arise where it appears
the firm may be required to pay significant amounts of compensation to consumers.
In those cases, the extent to which the firm has the financial resources to do so will
affect the [Authority]’s decision about whether exercise of the [Authority]’s own-
initiative powers is appropriate to preserve the firm's assets, in the interests of the
consumers. The [Authority] will take account of any insurance cover held by the
firm. It will also consider the likelihood of the firm's assets being dissipated without
the [Authority]’s intervention, and whether the exercise of the [Authority]’s power
to petition for the winding up of the firm is more appropriate than the use of its
own-initiative powers […].

(8) The firm’s conduct. The [Authority] will take into account:

(a) whether the firm identified the issue (and if so whether this was by chance or
as a result of the firm’s normal controls and monitoring);

(b) whether the firm brought the issue promptly to the [Authority]’s attention;

(c) the firm’s past history, management ethos and compliance culture;

(d) steps that the firm has taken or is taking to address the issue.

(9) The impact that use of the [Authority’s] own-initiative powers will have on the
firm’s business and on its customers.