FINAL NOTICE

Lakeside Window Systems Ltd
Unit A2
Ashmount Business Park
Upper Fforest Way
Swansea Enterprise Park
Swansea
SA6 8QR

ACTION

1. By an application dated 26 February 2016, Lakeside Window Systems Limited

(“LWS”) applied under section 55A of the Act for Part 4A permission to carry on
the regulated activity of credit broking.

2. The Application is incomplete.

3. For the reasons listed below, the Authority has refused the Application.

SUMMARY OF REASONS

4. By its Warning Notice the Authority gave notice that it proposed to refuse the

Application and that LWS was entitled to make representations to the Authority
about that proposed action.

5. As no representations were received by the Authority from LWS within the time

allowed by the Warning Notice, the default procedures in paragraph 2.3.2 of the
Authority’s Decision Procedure and Penalties Manual apply, permitting the

Authority to treat the matters referred to in its Warning Notice as undisputed and,
accordingly, to give a Decision Notice.

6. By its Decision Notice the Authority gave LWS notice that it had decided to take

the action described above.

7. LWS had 28 days from the date the Decision Notice was given to refer the matter

to the Tribunal. No referral was made to the Tribunal within this period of time or
to date.

8. Under section 390(1) of the Act, the Authority, having decided to refuse the

Application and there having been no reference of that decision to the Tribunal,
must give LWS Final Notice of its refusal.

9. The Authority has decided to refuse the Application and to give this Final Notice

as LWS has failed to provide the information required by the Authority and, in the
absence of the information sought, the Authority cannot ensure that LWS will
satisfy, and continue to satisfy, the threshold conditions set out in Schedule 6 of
the Act.

10. LWS has failed to respond to nine separate requests for the provision of

information considered, by the Authority, to be necessary to allow the Application
to be determined. These requests were made over a 14 week period; the
requests made on 14 September, 28 September and 17 October 2016 included a
statement to the effect that LWS must contact the Authority or face a Warning
Notice.

11. The Authority has therefore determined the Application based upon the

information received to date, in circumstances where its requests for information
have not been met. Having reviewed that information, the Authority cannot
ensure that LWS satisfies, and will continue to satisfy, the threshold conditions.

12. Authorised firms (and those seeking authorisation) are expected to engage with

the Authority in an open and cooperative way. The failure to provide the
requested information raises concerns that LWS would fail to do so if the
Application were granted.

13. The failure to provide the information raises concerns as to whether LWS:

(1) can be effectively supervised by the Authority as required by threshold

condition 2C;

(2) has appropriate human resources, given LWS's failure to provide the

Authority with the requested information as required by threshold

condition 2D; and

(3) will conduct its business with integrity and in compliance with proper

standards as required by threshold condition 2E.

DEFINITIONS

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

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

“the Application” means the application referred to in paragraph one above.

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

“the Decision Notice” means the decision notice dated 30 January 2016 given to
LWS by the Authority.

“L&I” means the Lending and Intermediaries Department at the Authority.

“the PRA” means the Prudential Regulation Authority.

“the RDC” means the Authority’s Regulatory Decisions Committee.

“the RTC” means the Authority’s Regulatory Transactions Committee.

“SUP” means the Supervision chapter of the Authority’s handbook.

“SYSC” means the Senior Management Arrangements, Systems and Controls
chapter of the Authority’s handbook.

“the Tribunal” means the Upper Tribunal (Tax & Chancery Chamber).

“the Warning Notice” means the warning notice dated 21 December 2016 given to
LWS by the Authority.

FACTS AND MATTERS

15. The Application was received by the Authority on 26 February 2016.

16. Further information was requested from LWS, under section 55U(5) of the Act.

17. Details of all the relevant communications between the Authority and LWS are set

out below.

18. On 20 July 2016, LWS was requested, to provide the following information in

support of the Application by 3 August 2016:

(1)
LWS’s regulatory business plan;

(2)
LWS’s compliance monitoring programme;

(3)
LWS’s organisational structure;

(4)
LWS’s opening balance sheet;

(5)
LWS’s forecast closing balance sheet;

(6)
LWS’s monthly cash flow forecast;

(7)
LWS’s monthly profit and loss forecast;

(8)
LWS’s latest end of year accounts;

(9)
CV for the person for whom a Part V application was submitted with the
Application;

(10) LWS’s complaints’ policy;

(11) LWS’s treating customers fairly policy;

(12) LWS’s vulnerable consumers’ policy;

(13) confirmation of which third party finance providers LWS use and intend to

refer customers to;

(14) how LWS source their customers;

(15) how LWS will mitigate the risk of high pressure selling caused by being a

domestic premises supplier;

(16) confirmation if LWS carry out any customer satisfaction follow ups; and

(17) how LWS determine the suitability of their agents entering customer

homes.

19. On 3 August 2016, L&I contacted LWS using a telephone number provided with

the Application. L&I advised that the information remained outstanding and
requested LWS provide this as per the email sent 20 July 2016. L&I confirmed
this request by way of email the same day and gave a deadline of 10 August
2016 for LWS to provide the information.

20. On 22 August 2016, L&I wrote to LWS by way of email advising that the

information remained outstanding and requested the firm provide it by 26 August
2016.

21. On 30 August 2016, L&I wrote to LWS by way of email advising them the

information remained outstanding and requested the firm provide it by 2
September 2016.

22. On 5 September 2016, L&I attempted to telephone LWS as the information had

not been provided by the stated deadline in the email of 30 August 2016. The call
was unanswered.

23. After eight weeks L&I had still received no response to their request for the

information.

24. On 14 September 2016 L&I wrote to LWS, noting the lack of a response to its

previous correspondence of 20 July, 3 August, 22 August and 30 August 2016.
L&I informed LWS that a failure to provide the information would result in L&I
recommending to the RTC that it give LWS a Warning Notice proposing to refuse
the Application. No substantive response was received to this correspondence by
the stated deadline of 23 September 2016 (i.e. within nine days).

25. On 14 September the sole director of LWS wrote to L&I by way of email. The

director stated that she was “currently off work” and “hoping to be back in work
Monday 26 Sept[ember]” 2016.

26. On 15 September 2016, L&I wrote to LWS by way of email, informing LWS that

should it fail to comply with the deadline of 23 September 2016 for the provision
of the information, L&I would commence the process of recommending a refusal
of the Application. No response to this correspondence was received by the stated
deadline of 23 September 2016.

27. On 28 September 2016 L&I wrote to LWS, noting the lack of a response to its

previous correspondence of 20 July 2016 reiterating that a failure to provide the
information would result in L&I recommending to the RTC that it issue LWS with a
Warning Notice proposing to refuse the Application. No response was received to
this letter by the stated deadline of 12 October 2016 (i.e. within 14 days).

28. On 13 October 2016, L&I attempted to contact LWS by telephone using numbers

provided with the Application. On the first attempt the call was unanswered. On
the second attempt L&I left a message requesting LWS contact L&I regarding the
Application and reminded the firm that the deadline for it to provide the
information was 12 October 2016. This was confirmed in writing by way of email
the same day by L&I.

29. On 17 October 2016 L&I wrote to LWS by way of special delivery letter. On the

same date, L&I wrote to the residential address of the sole director of LWS (this
address being supplied with the Application), also by way of special delivery
letter. Each letter, noted the lack of a response to its previous correspondence of
20 July, 3 August, 22 August, 30 August, 14 September, 15 September and 28
September 2016 and reiterated that a failure to provide the information would
result in L&I recommending to the RTC that it issue LWS with a Warning Notice
proposing to refuse the application. No response was received to this letter by the
stated deadline of 31 October 2016 (i.e. within 14 days).

30. On 1 November 2016, L&I attempted to contact LWS by telephone using a

number provided with the Application. An employee of LWS answered the call and
informed L&I that the director of LWS was unable to talk as they were with a
customer. L&I left a message with the employee requesting LWS’s director
contact L&I regarding the Application. L&I did not receive a return telephone call
from LWS.


IMPACT ON THRESHOLD CONDITIONS

31. The regulatory provisions relevant to this Final Notice are referred to in Annex A.

32. LWS has failed to respond to nine separate requests for the provision of

information considered, by the Authority, to be necessary to allow the Application
to be determined. These requests were made over a 14 week period; the
requests sent dated 14 September, 28 September and 17 October 2016 included
a statement to the effect that LWS must contact the Authority or face a Warning
Notice.


33. The Authority has therefore determined the Application based upon the

information received to date, in circumstances where its requests for information
have not been met. Having reviewed that information, the Authority cannot
ensure that LWS satisfies, and will continue to satisfy, the threshold conditions.


34. Authorised firms (and those seeking authorisation) are expected to engage with

the Authority in an open and cooperative way. The failure to provide the

requested information raises concerns that LWS would fail to do so if the
Application were to be granted.


35. The failure to provide the information raises concerns as to whether LWS:

(1)
can be effectively supervised by the Authority as required by threshold

condition 2C;

(2)
has appropriate human resources, given LWS's failure to provide the

Authority with the requested information as required by threshold

condition 2D; and

(3)
will conduct its business with integrity and in compliance with proper

standards as required by threshold condition 2E.

IMPORTANT NOTICES

36. This Final Notice is given under section 390(1) of the Act.

37. 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.

38. The Authority intends to publish such information about the matter to which this

Final Notice relates as it considers appropriate.

Authority contacts

39. For more information concerning this matter generally, contact John Battram,

Manager, Lending & Intermediaries Department at the Authority (direct line: 020
7066 1252 / email: John.Battram@fca.org.uk).

Patricia Knox
on behalf of the Regulatory Transactions Committee

ANNEX A – REGULATORY PROVISIONS RELEVANT TO THIS FINAL NOTICE

1. Section 55A(1) of the Act provides for an application for permission to carry on

one or more regulated activities to be made to the appropriate regulator. Section
55A(2) defines the “appropriate regulator” for different applications.

2. Section 55B(3) of the Act provides that, in giving or varying permission, imposing

or varying a requirement, or giving consent, under any provision of Part 4A of the
Act, each regulator must ensure that the person concerned will satisfy, and
continue to satisfy, in relation to all of the regulated activities for which the
person has or will have permission, the threshold conditions for which that
regulator is responsible.

3. The threshold conditions are set out in schedule 6 of the Act. In brief, the

threshold conditions relate to:

(1)
Threshold condition 2B: Location of offices

(2)
Threshold condition 2C: Effective supervision

(3)
Threshold condition 2D: Appropriate resources

(4)
Threshold condition 2E: Suitability

(5)
Threshold condition 2F: Business model

Relevant provisions of the Authority’s Handbook

4. 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’s Handbook,
including the part titled Threshold Conditions (“COND”). The main considerations
in relation to the action specified are set out below.

5. 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.

6. COND 1.3.3AG provides that, in determining the weight to be given to any

relevant matter, the Authority will consider its significance in relation to the
regulated activities for which the firm has, or will have, permission in the context
of its ability to supervise the firm adequately, having regard to the Authority’s
statutory objectives. In this context, a series of matters may be significant when
taken together, even though each of them in isolation might not give serious
cause for concern.

7. COND 1.3.3BG provides that, in determining whether the firm will satisfy, and

continue to satisfy, the Authority threshold conditions, the Authority will have
regard to all relevant matters, whether arising in the United Kingdom or
elsewhere.

8. COND 1.3.3CG provides that, when assessing the Authority’s threshold

conditions, the Authority may have regard to any person appearing to be, or

likely to be, in a relevant relationship with the firm, in accordance with section
55R of the Act (Persons connected with an applicant). For example, a firm’s
controllers, its directors or partners, other persons with close links to the firm
(COND 2.3), and other persons that exert influence on the firm which might pose
a risk to the firm’s satisfaction of the Authority’s threshold conditions, would be in
a relevant relationship with the firm.

Threshold Condition 2C: Effective Supervision

9. COND 2.3.3G states that, in assessing the threshold condition set out in

paragraph 2C of Schedule 6 to the Act, factors which the Authority will take into
consideration include, among other things, whether it is likely that the Authority
will receive adequate information from the firm to determine whether it is
complying with the requirements and standards under the regulatory system for
which the Authority is responsible and to identify and assess the impact on its
statutory objectives; this will include consideration of whether the firm is ready,
willing and organised to comply with Principle 11 (Relations with regulators) and
the rules in SUP on the provision of information to the Authority.

Threshold condition 2D: Appropriate Resources

10. COND 2.4.2G(2) states that the Authority 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.

11. COND 2.4.2G(2A) provides that ‘non-financial resources’ of the firm include

human resources it has available.

12. COND 2.4.2G(3) states that high level systems and control requirements are in

SYSC. The Authority will consider whether the firm is ready, willing and organised
to comply with these and other applicable systems and controls requirements
when assessing if it has appropriate non-financial resources for the purpose of the
threshold conditions set out in threshold condition 2D.

Threshold condition 2E: Suitability

13. COND 2.5.2G(2) states that the Authority 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 position within a UK or international group, information
provided by overseas regulators about the firm, and 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.

14. COND 2.5.4G(2)(c) states that examples of the kind of general considerations to

which the Authority may have regard when assessing whether a firm will satisfy,
and continue to satisfy, threshold condition 2E include, but are not limited to,
whether the firm can demonstrate that it conducts, or will conduct, its business
with integrity and in compliance with proper standards.

15. COND 2.5.6G provides that examples of the kind of particular considerations to

which the Authority may have regard when assessing whether a firm will satisfy,
and continue to satisfy, this threshold condition include, but are not limited to,
whether the firm has been open and co-operative in all its dealings with the
Authority and any other regulatory body (see Principle 11 (Relations with
regulators)) and is ready, willing and organised to comply with the requirements
and standards under the regulatory system (such as the detailed requirements of
SYSC and, in relation to a firm not carrying on, or seeking to carry on, a PRA-
regulated activity only, the Prudential Standards part of the Authority’s
Handbook) in addition to other legal, regulatory and professional obligations; the
relevant requirements and standards will depend on the circumstances of each
case, including the regulated activities which the firm has permission, or is
seeking permission, to carry on.