FINAL NOTICE

PROPOSED ACTION

1.
For the reasons listed below, the Authority hereby takes the following action
against Kevin Allen:

(a)
publishes a statement of his misconduct, pursuant to section 66 of the Act,
for failing to comply with Statement of Principle 1; and

(b)
makes an order against Mr Allen, pursuant to section 56 of the Act,
prohibiting Mr Allen from performing any function in relation to any
regulated activity carried on by any authorised person, exempt person or
exempt professional firm.

2. The Authority considers that Mr Allen’s misconduct also merits a financial penalty

pursuant to section 66 of the Act. Had Mr Allen not provided verifiable evidence that
the imposition of a financial penalty of any amount would cause him serious financial
hardship, the Authority would have proposed to impose on him a financial penalty of
£355,000. In that event, Mr Allen would have qualified for a 30% discount (Stage 1)
in accordance with the Authority’s executive settlement procedure, reducing the
penalty to £248,500.

SUMMARY OF REASONS

3. On the basis of the facts and matters described below, the Authority has concluded

that Mr Allen failed to act with integrity in carrying out his controlled functions in
breach of Statement of Principle 1, by deliberately causing New Life to make
illegitimate payments and directing his firm NMB to receive the payments to fund its
running costs. Mr Allen also fabricated an email purporting to provide authority for
one of the transfers and altered a bank statement in order to conceal from New Life
that he had directed another of the transfers to be received by NMB.

4. The serious nature of these breaches leads the Authority to conclude that Mr Allen is

not a fit and proper person to perform any function in relation to any regulated
activities carried on by any authorised person, exempt person or exempt professional
firm, and that he should be prohibited from doing so.

5. This action supports the Authority’s operational objectives of securing an appropriate

degree of protection for consumers and protecting and enhancing the integrity of the
UK financial system.

DEFINITIONS

6.
The following definitions are used in this Final Notice (and in the Annexes):

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

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

“DEPP” means the Authority’s Decision Procedure and Penalties Manual;

“EG” means the Authority’s Enforcement Guide;

“FIT” means the Authority’s Fit and Proper Test for Approved Persons;

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

“New Life” means New Life Mortgages Limited;

“NMB” means The NMB Group Limited;

“the Relevant Period” means 26 March 2009 to 29 July 2012; and

“the Statements of Principle(s)” means the Authority’s Statements of Principle for
Approved Persons.

FACTS AND MATTERS

7.
On 31 October 2004, NMB was authorised by the Authority to conduct mortgage
mediation activities and Mr Allen was approved to perform the CF1 (Director), the
CF11 (Money Laundering Reporting) and the CF8 (Apportionment and Oversight)
controlled functions at NMB. Mr Allen was the sole shareholder of NMB. Mr Allen
remained a Director of NMB throughout the Relevant Period. He ceased to hold the
CF8 (Apportionment and Oversight) controlled function on 31 March 2009, and
ceased to hold the CF11 (Money Laundering Reporting) controlled function on 21
December 2012. He ceased to hold the CF1 (Director) controlled function on 12

February 2013 and is no longer an approved person with NMB or any other firm
authorised or regulated by the Authority.

8.
On 31 October 2004, New Life was authorised by the Authority to conduct
mortgage mediation activities and Mr Allen was approved to perform the CF1
(Director) and CF11 (Money Laundering Reporting) controlled functions at New Life
with those permissions continuing throughout the Relevant Period, until 27
September 2012. Mr Allen was a 9% shareholder and NMB was a 37% shareholder
in New Life.

9.
During the Relevant Period, NMB acted as a specialist loan administration company
and New Life offered equity release mortgage products (lifetime mortgages). New
Life sourced funding from third parties and lent that money to customers in the
form of regulated mortgage contracts, receiving repayments from borrowers in
relation to those mortgage contracts. New Life’s third party funding was secured
against its mortgage book. NMB, under inter-company agreements with New Life,
assisted with the administration of New Life’s mortgage book and was entitled to
receive a fee for this service. The amount earned by NMB in fees was dependent
upon the number of loans being underwritten each month by New Life and the
overall balance of the loan book being administered by NMB.

10.
On 2 October 2012, New Life notified the Authority that Mr Allen had resigned as
Finance Director of New Life with effect from 28 September 2012 and in offering his
resignation, Mr Allen had admitted to making unauthorised transfers of monies
from New Life to NMB. In October 2012, New Life carried out an internal
investigation regarding the unauthorised transfers and in February 2013, New Life
submitted its internal investigation report to the Authority. In that report, New Life
stated that Mr Allen had admitted to making unauthorised transfers from New Life
to NMB since 2010 and that Mr Allen had also admitted to fabricating an email
purporting to agree to one of the unauthorised transfers.

11.
Mr Allen was disqualified from acting as a director for three years with effect from 5
February 2013 as no accounts has been filed in relation to NMB since those for the
year ended 29 February 2008. At the date of Mr Allen’s disqualification he was the
only director of NMB.

12.
NMB ceased trading on 26 April 2013 when it entered into administration. On 1
July 2013, NMB was sold to New Life and on 13 March 2014, NMB moved into
creditors’ voluntary liquidation.

13.
On 10 July 2014, NMB’s application to cancel its Part 4A permission was accepted
by the Authority and NMB’s Part 4A permission was cancelled on that same date.

Mr Allen’s conduct

14.
During the Relevant Period, NMB legitimately invoiced New Life for monthly fees
totalling approximately £1,600,000 under the inter-company agreements between
New Life and NMB and during the Relevant Period, legitimate payments were made
to NMB in respect of those fees.

15.
NMB’s overheads in relation to its administration of New Life’s mortgage book were
fixed and did not vary when the number of loans written by New Life reduced. Mr
Allen admitted to making additional, illegitimate transfers totalling £1,000,000
from New Life which he directed to be received by NMB (as set out in the table
below), without the knowledge or approval of New Life’s other directors, when New
Life was not generating the volume of loans required to provide the levels of fees
adequate to meet NMB’s running costs such that NMB was at risk of becoming
insolvent. Mr Allen stated that because the fees under the inter-company
agreements were fixed and could not be increased, he took it upon himself to make
payments from New Life to NMB representing what he considered to be dividends

that he believed were due to NMB. He stated that he had hoped that there would
be a declared dividend payment, or a super dividend, against which those amounts
transferred could be netted off, but that did not happen.

Illegitimate transfers from New Life to NMB made on the sole direction of Kevin
Allen

1
26 March 2009
£100,000

2
29 May 2009
£100,000

3
30 June 2009
£100,000

4
26 February 2010
£35,000

5
31 March 2010
£60,000

6
28 April 2010
£50,000

7
18 June 2010
£50,000

8
19 July 2010
£100,000

9
2 September 2010
£100,000

10
28 October 2010
£50,000

11
27 January 2011
£50,000

12
13 July 2011
£100,000

13
28 June 2012
£75,000

14
17 July 2012
£30,000

Total

£1,000,000

16.
New Life used NMB staff to conduct its day-to-day activities. Any transfers made
out of New Life or out of NMB were made via internet banking. A form would be
filled in with the payee’s bank details with a brief description of the transaction. All
transfers would require two individuals to enter their authorisation codes into the
system before the transfer could be made. In relation to the illegitimate transfers,
Mr Allen gave the form to a member of the finance team and instructed that
employee to make the payment. Mr Allen would log in, and then instruct another
member of that same team to log in too (as the system required authorisation
codes from two individuals), and the payment would be sent. Mr Allen effectively
over-rode the payment system and its safeguards by instructing members of the
finance team to enter their login details.

17.
New Life’s internal processes prohibited the making of any loan or advance to any
body corporate and also prohibited the disposal of any assets exceeding £50,000

without the approval of the other directors of New Life. Both of those prohibitions
were breached by Mr Allen.

18.
Mr Allen also fabricated an exchange of emails purportedly between Mr Allen and
another director. The email exchange was provided to a colleague of Mr Allen, as
evidence claiming to authorise the £75,000 transfer made on 28 June 2012.
Further, Mr Allen also falsified a bank statement to mislead New Life’s auditors into
believing that a payment of £100,000 dated 26 March 2009 from New Life had
been made to HMRC (rather than that he had directed the funds to be received by
NMB). He did this in order to expedite the signing-off of New Life’s accounts.

FAILINGS

19.
The statutory and regulatory provisions relevant to this Notice are set out in Annex
A.

Failing to act with integrity in carrying out his controlled functions: Statement of
Principle 1

20.
Mr Allen, as a director of both NMB and New Life, failed to act with honesty and
integrity in carrying out his controlled function as an approved person (CF1
Director), in that he deliberately caused New Life to make illegitimate payments to
NMB totalling £1,000,000 and fabricated documents in order to procure or conceal
some of the money transfers.

Not fit and proper

21.
By reason of the facts and matters described above, the Authority considers that

Mr Allen lacks honesty and integrity and, therefore, is not a fit and proper person.

SANCTIONS

Financial penalty

22.
Given Mr Allen’s breach of Statement of Principle 1, the Authority may impose a
financial penalty on him pursuant to section 66 of the Act. The Authority’s policy
for imposing a financial penalty is set out in Chapter 6 of DEPP. In determining the
financial penalty, the Authority has had regard to that guidance.

23.
Changes to DEPP were introduced on 6 March 2010. Given that Mr Allen’s breach
occurred both before and after that date, the Authority has had regard to the
provisions in DEPP in force before and after that date.

24.
The application of the Authority’s penalty policy is set out in Annex A to this Notice
in relation to:

(1)
Mr Allen’s breach of Principle 1 prior to 6 March 2010; and

(2)
Mr Allen’s breach of Principle 1 on or after 6 March 2010.

25.
In determining the financial penalty to be attributed to Mr Allen’s breach prior to
and on or after 6 March 2010, the Authority has had particular regard to the
following matters as applicable during each period:

(1)
the need for credible deterrence;

(2)
the nature, seriousness and impact of the breach;

(3)
the applicable settlement discount for agreeing to settle at an early stage

of the Authority’s investigation; and

(4)
serious financial hardship.

26.
The penalty calculation in relation to Mr Allen is set out in Annex B to this Notice.
Having regard to all the circumstances, the Authority considers that £248,500
(after a 30% Stage 1 discount), is the appropriate financial penalty to impose on
Mr Allen. However, having taken into account all the circumstances of the case,
including that Mr Allen derived no direct personal benefit from his misconduct and
that the Authority considers that Mr Allen has provided verifiable evidence that he
would suffer serious financial hardship if he was required to pay any financial
penalty at all, the penalty has been reduced to £0.

Public censure

27.
Applying the criteria set out in DEPP 6.2.1G (regarding whether or not to take
action for a financial penalty or public censure) and DEPP 6.4.2G (regarding
whether to issue a public censure rather than impose a financial penalty), the
Authority considers that a financial penalty would have been an appropriate
sanction, given the nature of the breaches, were it not for the fact that Mr Allen has
provided verifiable evidence that he would suffer serious financial hardship if any
financial penalty were to be imposed. The Authority therefore considers that a
public censure is an appropriate sanction. This is in accordance with guidance set
out in DEPP 6.4.2G(8)(a).

28.
The Authority considers that in light of the conduct described above, Mr Allen is not
a fit and proper person as he lacks honesty and integrity, and poses a serious risk
to consumers. The Authority, therefore, considers it appropriate to prohibit Mr Allen
from performing any function in relation to any regulated activity carried on by any
authorised person, exempt person or exempt professional firm.

PROCEDURAL MATTERS

Decision Maker

29.
The decision which gave rise to the obligation to give this Final Notice was made by
the Settlement Decision Makers.

30.
This Final Notice is given to Mr Allen in accordance with section 390 of the Act and
it is being served on Mr Allen at his last known address.

31.
Section 391(1), 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 it considers appropriate. The information may be
published in such manner as the Authority considers appropriate. However, the
Authority may not pubish information if such publication would, in the opinion of
the Authority, be unfair to Mr Allen or prejudicial to the interests of consumers.

32.
The Authority intends to publish such information about the matter to which this
Final Notice relates as it considers appropriate.

7

Authority contact

33.
For more information concerning this matter contact Stephanie Prowse at the
Authority (direct line: 0207 066 9404).

Bill Sillett
Enforcement and Market Oversight Division

ANNEX A


RELEVANT STATUTORY PROVISIONS

1.
The Authority’s operational objectives established in section 1(B) of the Act include
protecting and enhancing the integrity of the UK financial system and securing an
appropriate degree of protection for consumers.

2.
The Authority has the power, pursuant to Section 56 of the Act, to make a
prohibition order against an individual prohibiting that individual from performing a
specified function, any function falling within a specified description, or any
function, if it appears to the Authority that the individual is not a fit and proper
person to perform functions in relation to a regulated activity carried on by an
authorised person.

3.
Section 66 of the Act provides that the Authority may take action against a person
if it appears to the Authority that he is guilty of misconduct and the Authority is
satisfied that it is appropriate in all the circumstances to take action against him.
Misconduct includes failure, while an approved person, to comply with a statement
of principle issued under section 64 of the Act. The action that may be taken by the
Authority pursuant to section 66 of the Act includes publishing a statement of his
misconduct.

RELEVANT HANDBOOK PROVISIONS

Fit and Proper Test for Approved Persons (FIT)

4.
FIT sets out the criteria for assessing the fitness and propriety of a candidate for a
controlled function. FIT is also relevant in assessing the continuing fitness and
propriety of an approved person.

5.
FIT 1.3 provides that the Authority will have regard to a number of factors when
assessing the fitness and propriety of a person. The most important considerations
will be the person’s honesty, integrity and reputation, competence and capability,
and financial soundness.

Statements of Principle and Code of Practice for Approved Persons (APER)

6.
APER sets out the fundamental obligations of approved persons and sets out
descriptions of conduct, which, in the opinion of the Authority, do not comply with
the relevant Statements of Principle. It also sets out, in certain cases, factors to be
taken into account in determining whether an approved person’s conduct complies
with a Statement of Principle.

7.
APER 2.1.2P sets out Statement of Principle 1 which, at the relevant time, stated
that an approved person must act with integrity in carrying out his controlled
function.

OTHER RELEVANT REGULATORY PROVISIONS

The Authority’s policy on the imposition of financial penalties

8.
The Authority's policy in relation to the imposition of financial penalties is set out in
Chapter 6 of DEPP (the penalty analysis in relation to Mr Allen is located at Annex
B).

DEPP as applied both before and after 6 March 2010

9.
The Authority will consider the full circumstances of each case when determining
whether or not to impose a financial penalty. DEPP 6.2.1G sets out guidance on a
non-exhaustive list of factors that may be of relevance in determining whether to
impose a financial penalty, which include the following:-

(a)
DEPP 6.2.1G(1): The nature, seriousness and impact of the suspected
breach, including whether the breach was deliberate or reckless, the
duration and frequency of the breach, the amount of any benefit gained or
loss avoided as a result of the breach, the loss or risk of loss caused to
consumers or other market users, and the nature and extent of any
financial crime facilitated, occasioned or otherwise attributable to the
breach.

(b)
DEPP 6.2.1G(2): The conduct of the person after the breach, including how
quickly, effectively and completely the person brought the breach to the
attention of the Authority, the degree of co-operation the person showed
during the investigation of the breach, and the nature and extent of any
false or inaccurate information given by the person and whether the
information appears to have been given in an attempt to knowingly
mislead the Authority.

(c)
DEPP 6.2.1G(5): Action taken by the Authority in previous similar cases.

DEPP as applied on and after 6 March 2010

10.
DEPP 6.5D sets out the Authority’s approach to serious financial hardship.

11.
DEPP 6.5D.1 states that the Authority may consider whether a reduction in the
proposed penalty is appropriate if the penalty would cause the subject of the
enforcement action to suffer serious financial hardship.

12.
DEPP 6.5D.1(2)(a) sets out that the Authority will only consider a reduction if the
individual provides verifiable evidence that payment of the penalty will cause them
serious financial hardship.

13.
DEPP 6.5D.2(1) states that the Authority would consider an individual’s ability to
pay the penalty over a reasonable period. The Authority’s starting point is that an
individual will suffer serious financial hardship only if during that period his net
annual income will fall below £14,000 and his capital will fall below £16,000 as a
result of payment of the penalty.

The Authority’s policy for exercising its power to make a prohibition order

14.
The Authority’s approach to exercising its power to make prohibition orders is set
out in Chapter 9 of EG.

15.
EG 9.1 states that the Authority may exercise this power to make a prohibition
order where it considers that, to achieve any of those objectives, it is appropriate
either to prevent an individual from performing any functions in relation to
regulated activities, or to restrict the functions which he may perform.

ANNEX B

Penalty Analysis

1.
The Authority’s policy for imposing a financial penalty is set out in Chapter 6 of

DEPP. In determining the financial penalty, the Authority has had regard to this

guidance.

2.
Changes to DEPP were introduced on 6 March 2010. Given that Mr Allen’s breach

occurred both before and after that date, the Authority has had regard to the

provisions of DEPP in force before and after that date.

3.
The application of the Authority’s penalty policy is set out below in relation to:

(1)
Mr Allen’s breach of Statement of Principle 1 prior to 6 March 2010; and

(2)
Mr Allen’s breach of Statement of Principle 1 on or after 6 March 2010.

4.
Breach of Statement of Principle 1 prior to 6 March 2010

4.1.
In determining the financial penalty to be attributed to Mr Allen’s breach prior to 6
March 2010, the Authority has had particular regard to the following:

Deterrence (DEPP 6.5.2G(1))


4.2.
The principal purpose of a financial penalty is to promote high standards of
regulatory conduct by deterring individuals who have breached regulatory
requirements from committing further contraventions, helping to deter others
from committing contraventions and demonstrating generally to individuals the
benefits of compliant behaviour.

The nature, seriousness and impact of the breach in question (DEPP
6.5.2G(2))


4.3.
Mr Allen exhibited deliberate and sustained dishonesty over a three year period.
In the period prior to 6 March 2010, Mr Allen made four illegitimate transfers from
New Life to NMB. The loss to New Life during this period totalled £335,000.
Whilst there was no direct risk to consumers as a result of Mr Allen’s dishonest
actions, Mr Allen abused his positions within NMB and New Life and the trust of
his employees in order to cause the transfers of cash from New Life to NMB, for
which there was no legitimate basis.

The extent to which the breach was deliberate or reckless (DEPP
6.5.2G(3))


4.4.
Mr Allen has admitted to knowingly causing illegitimate transfers to be made by
providing the relevant authority requesting that his employees execute the cash
transfers from New Life to NMB. His actions were therefore deliberate.


Whether the person on whom the penalty is to be imposed is an individual
(DEPP 6.5.2G(4)) and the financial resources of the person on whom the
penalty is to be imposed (DEPP 6.5.2G(5))


4.5.
Information provided by Mr Allen indicates that he has an annual income of less
than £14,000 and capital of less than £16,000.

Other action taken by the Authority (or a previous regulator) (DEPP
6.5.2G(10))

4.6.
In determining whether to impose a financial penalty on Mr Allen in respect of his
breach of Statement of Principle 1, the Authority has taken into account action
taken by the Authority in relation to comparable breaches.

4.7.
The Authority considers that Mr Allen’s breach of Statement of Principle 1 in the
period prior to 6 March 2010 (26 March 2009 until 5 March 2010) merits a
financial penalty of £65,000 before settlement discount.

4.8.
Mr Allen agreed to settle at an early stage of the Authority’s investigation. Mr
Allen therefore qualified for a 30% (Stage 1) discount under the Authority’s
executive settlement procedures. The Authority considers that Mr Allen’s
misconduct merits a financial penalty of £45,500 in relation to the breach of
Statement of Principle 1.

5.
Breach of Statement of Principle 1 on or after 6 March 2010

5.1.
In respect of any breach occurring on or after 6 March 2010, the Authority applies
a five-step framework to determine the appropriate level of financial penalty.
DEPP 6.5B sets out the details of the five-step framework to determine the
appropriate level of financial penalty. DEPP 6.5B sets out the details of the five-
step framework that applies in respect of financial penalties imposed on
individuals in non-market abuse cases.

5.2.
Mr Allen gained no direct benefit from the breaches as all the money
misappropriated from New Life was paid to NMB and used for the business
expenses of NMB.


5.3.
The Step 1 figure is therefore £0.

Step 2: Seriousness of the breach

5.4.
At Step 2 the Authority determines a figure that reflects the seriousness of the
breach (DEPP 6.5B.2G). The Authority will determine a figure which will be based
on a percentage of an individual’s “relevant income”. Relevant income will be the
gross amount of all benefits received by the individual from the employment in
connection with which the breach occurred during the Relevant Period.


5.5.
The Authority considers Mr Allen’s relevant income for the period 6 March 2010 to
29 July 2012 to have been £725,106.


5.6.
In deciding on the percentage of the relevant income that forms the basis of the
Step 2 figure, the Authority considers the seriousness of the breach and chooses a
percentage between 0% and 20%. This range is divided into five fixed levels
which represent, on a sliding scale, the seriousness of the breach; the more
serious the breach, the higher the level. For penalties imposed on individuals in
non-market abuse cases there are the following five levels:

Level 1 – 0%

Level 2 – 10%

Level 3 – 20%

Level 4 – 30%

Level 5 – 40%

5.7.
In assessing the seriousness level, the Authority takes into account various
factors which reflect the impact and nature of the breach, and whether it was
committed deliberately or recklessly. The Authority considers that the following
factors are relevant:

Impact of the breach


5.8.
The loss to New Life in the period after 6 March 2010 totalled £665,000.
However, there was no apparent loss or risk of loss caused to individual
consumers or consumers in general.

Nature of the breach


5.9.
Mr Allen, who held senior positions at both New Life and NMB, failed to act with
honesty and integrity and abused his position of trust within New Life and NMB to
facilitate the transfers of monies. Mr Allen’s misconduct continued throughout the
Relevant Period, involving 14 illegitimate transfers that were made during a three
year period (10 of which were made in the period after 6 March 2010). Mr Allen
was also an experienced industry professional.

Whether the breach was deliberate or reckless


5.10. Mr Allen has admitted to causing the transfers deliberately, knowing there was no

legitimate basis for the transfers of money from New Life to NMB and in the belief
that the breach would be difficult to detect. His actions were therefore deliberate.


5.11. Taking all of these factors into account, the Authority considers the seriousness of

Mr Allen’s breach of Statement of Principle 1 on or after 6 March 2010 to be level
5 and so the Step 2 figure is 40% of £725,106.


5.12. The Step 2 figure is therefore £290,042.


Step 3: Mitigating and aggravating factors

5.13. At Step 3 the Authority may increase or decrease the amount of the financial

penalty arrived at after Step 2 to take into account factors which aggravate or
mitigate the breach (DEPP 6.5B.3G).


5.14. The Authority does not consider there to have been any aggravating or mitigating

factors. Therefore the Step 3 figure is £290,042.

Step 4: Adjustment for deterrence


5.15. If the Authority considers the figure arrived at after Step 3 is insufficient to deter

the person who committed the breach, or others, from committing further or
similar breaches, then the Authority may increase the penalty.


5.16. The Authority considers that the Step 3 figure of £290,042 represents a sufficient

deterrent in the circumstances of this case.

Step 5: Settlement discount


5.17. DEPP 6.7 provides that the amount of the financial penalty which might otherwise

have been payable will be reduced to reflect the stage at which the Authority and
Mr Allen reached agreement.


5.18. The Authority and Mr Allen reached agreement at Stage 1 so a 30% discount

applies to the Step 4 figure.


5.19. The Step 5 figure is therefore £203,000 (rounded down to the nearest £100).

6.
Serious Financial Hardship


6.1.
Pursuant to DEPP 6.5D.1G the Authority may reduce the proposed penalty if
appropriate, if the penalty would cause the individual serious financial hardship.


6.2.
Information provided by Mr Allen indicates that he has an annual income of less
than £14,000 and capital of less than £16,000. In light of this, the Authority has
reduced the penalty to £0 on the grounds of serious financial hardship.


7.
Conclusion


7.1.
The Authority considers that £355,000 is an appropriate financial penalty to
impose on Mr Allen (before any Stage 1 discount), comprising:

(1)
A penalty of £65,000 relating to Mr Allen’s breach of Statement of Principle

1 under the old penalty regime; and

(2)
A penalty of £290,042 relating to Mr Allen’s breach of Statement of

Principle 1 under the new penalty regime.

7.2.
After the Stage 1 discount is applied to the total penalty, the total amount is
reduced to £248,500.


7.3.
However, the Authority considers that Mr Allen has provided verifiable evidence
that he would suffer serious financial hardship if he was required to pay any
penalty and as such, the penalty has been reduced to £0.