FINAL NOTICE

ACTION

1. By an application dated 1 April 2014 (“the Application”) Mr Neil Moir, trading as
Readymoney, (“Mr Moir”) applied under section 40 of the Financial Services and
Markets Act 2000 (“the Act”) for Part 4A permission to carry on the regulated
activity of ‘Consumer hire’.

2. On 20 September 2014, Mr Moir wrote to the Authority confirming that he wanted
full permission to carry out ‘Credit broking’, rather than the ‘Consumer hire’
permission.

3. Though Mr Moir’s letter of 20 September 2014 was not explicit in stating that he
also wanted permissions to carry out the activities of ‘Entering into a regulated
credit agreement as a lender (Excluding high-cost short-term credit, bill of sale
agreement, and home credit loan agreement)’ and ‘Exercising or having the right
to exercise a lender’s rights and duties under a regulated credit agreement
(excluding high-cost short-term credit, bill of sale agreement, and home credit
loan agreement)’, the Authority inferred (from the content of that letter and the
fact that Mr Moir enclosed with his letter a cheque for £500.00, which
corresponded to the additional fee payable in respect of an application for those
permissions, as set out in a letter from the Authority to Mr Moir dated 13 August
2014) that Mr Moir desired those permissions.

4. Mr Moir’s application remains incomplete.

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

SUMMARY OF REASONS

6. By its Warning Notice dated 29 January 2015 (“the Warning Notice”) the
Authority gave notice that it proposed to refuse the Application and that Mr Moir
was entitled to make representations to the Authority about that proposed action.

7. Mr Moir’s written representations were received by the Authority on 28 February
2015. In addition to his written representations, Mr Moir made oral
representations
to
the
Authority’s
Regulatory
Decisions
Committee
on
8 April 2015. Having considered Mr Moir’s representations the Authority made
the decision to give a Decision Notice refusing the Application, in accordance with
paragraph 2.3.1 G of the Authority’s Decision Procedure and Penalties Manual on
the basis that:

(a) The Authority cannot ensure that Mr Moir will satisfy, and continue to
satisfy, in relation to the regulated activities for which permission is
sought, the threshold conditions set out in Schedule 6 of the Act.

(b) In relation to the effective supervision threshold condition (in paragraph
2C of Schedule 6), the Authority is not satisfied that Mr Moir can be
effectively supervised.

(c) In relation to the appropriate resources threshold condition (in paragraph
2D of Schedule 6), the Authority is not satisfied that Mr Moir has
appropriate non-financial resources in place.

8. By its Decision notice dated 5 May 2015 (“the Decision Notice”), the Authority
gave Mr Moir notice that it had decided to take the action described above.

9. Mr Moir had 28 days from the date the Decision Notice was given to refer the
matter to the Upper Tribunal (formerly known as the Financial Services and
Markets Tribunal). No referral was made to the Upper Tribunal within this period
of time or to date.

10. 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 Mr Moir Final Notice of its refusal.

DEFINITIONS

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

“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

FACTS AND MATTERS

12. On 1 April 2014, Mr Moir submitted a limited permission application electronically
to the Authority. The only permission that was selected was ‘consumer hire’. An
email address was provided on the application form.

13. In a telephone conversation between Mr Moir and the Authority (held on
12 May 2014) Mr Moir stated that there were no links between himself and the
entity to which the email address related; he had given this email address just to
“fill and complete” the application form.

The effective supervision threshold condition (paragraph 2C of Schedule 6 to
the Act)

14. A key part of the Authority’s supervision framework is the electronic provision,
by firms, of information on its regulatory activities (via the Authority’s GABRIEL
system). Mr Moir has been unable to satisfy the Authority that he
is ready, willing and organised to use such a system.

15. Mr Moir has not given a satisfactory explanation of how he would remain up to
date with regulatory requirements (for example, by receiving electronic
communications that are sent by the Authority, such as its monthly regulatory
round-up, changes to the Handbook, Consultation Papers, etc).

16. Mr Moir has failed to respond on time to any request made by the Authority.

17. In a letter dated 16 July 2014, Mr Moir stated that that he communicated by post
or orally rather than by email. When Mr Moir has responded to the Authority by
letter, these responses have been handwritten rather than typed, which
has
made
reviewing
and
responding
to
his
letters
a
more
time
consuming
process.
Mr
Moir
has
confirmed
that
he
has
no disability which prevents him from using email, and that he does use
email in relation to his other business interests. In a letter dated 20 September
2014 Mr Moir said that, once authorised, he would engage someone to operate a
laptop and email.

18. Mr Moir told the Authority that he had not always seen until some time after their
despatch letters sent to him by the Authority because he only infrequently
collected post from the postbox on his domestic premises.

19. The Authority is therefore not satisfied that Mr Moir can be effectively supervised,
having regard to the guidance in COND 2.3.3G and to the regulatory principles
set out in s.3B of the Act, in particular the need to use its resources in the most
efficient and economic way.

The appropriate resources threshold condition (Paragraph 2D of Schedule 6
to the Act)

20. Throughout the application process, Mr Moir has demonstrated a lack of
understanding of the regulatory framework and an unwillingness to engage
co-operatively with the Authority. In particular:

(a)
In his application form (dated 1 April 2014), Mr Moir stated that he wished
to apply for permission to carry out limited permission consumer hire
activities. Following telephone conversations between Mr Moir and the
Authority on 12 and 21 May 2014, it became apparent that Mr Moir’s
proposed business would not be covered by the permission sought, and that
he would be required to apply for full permission for credit broking. The
Authority wrote to Mr Moir on 23 May 2014 to inform him of this, and that
he would need to submit a business plan in support of his application.


(b)
Mr Moir’s business plan was received by the Authority on 23 July 2014. In
his business plan Mr Moir revealed that, in addition to credit broking, he was
also contemplating lending directly to customers. In his cover letter to the
business plan, Mr Moir stated:

“…I outline below what I am proposing to do and the fact that nearly
all of what I am proposing can’t be done immediately until there is
money, I’ll leave it to you to put it in whatever box applies”.

Mr Moir’s business plan also indicated that he was intending to assist
customers to obtain a mortgage (either “to buy a house or to start a
business”). Mr Moir has not applied for any permissions in relation to
regulated mortgage activity (for example, ‘Arranging regulated mortgage
contracts’ under Article 25A(1) of Part II of the Financial Services and
Markets Act 2000 (Regulated Activities Order) 2001).

(c)
On 13 August 2014, the Authority wrote to Mr Moir seeking details of
(amongst other things) his systems and controls, his policies in relation to
vulnerable customers, his charges and fees, his advertising and sales
processes and his complaint handling procedures.

(d)
On 23 September 2014, the Authority received a response from Mr Moir. In
response to a request by the Authority in relation to “full detail[s]... [of]
your terms… [for] lending… including copies of contracts / agreements / pre-
contract information that you will use” Mr Moir replied:

“As not authorised yet there is no literature yet. As no money to lend
yet, all this is irrelevant, but if we agree to provide you with all
literature for you to vet before we do our first lend, that is as far as we
can go for now”.

(e)
In representations provided in response to the Warning Notice, Mr Moir
provided some further information, including an email address and copies of
a client care leaflet and standard terms of business. This was insufficient to
respond adequately to the Authority’s outstanding queries.

21. Mr Moir proposes to perform his activities as a sole trader and, although he has
indicated in general terms an intention to engage assistance, he has provided no
proper details of any additional support (either from staff or external consultants)
he will receive. The Authority considers that Mr Moir himself does not have the
knowledge and understanding required to exercise his intended role in compliance
with the Authority’s regulatory standards, or properly to supervise staff in
assessing what is required.

22. Consequently, the Authority is not satisfied that Mr Moir has appropriate non-
financial resources.

IMPACT ON THE THRESHOLD CONDITIONS

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

24. The Authority does not consider that Mr Moir has demonstrated that he will
satisfy, and will continue to satisfy, in relation to the regulated activities for which
he seeks permission, the threshold conditions for which the Authority is
responsible.

25. In relation to the effective supervision threshold condition (paragraph 2C of
Schedule 6 to the Act), the Authority is not satisfied that Mr Moir can be
effectively supervised. In reaching this conclusion, the Authority has had regard
to the following facts:

(a) Mr Moir has failed to respond to any request made by the Authority on
time. Letters sent to Mr Moir by mail have not always been read and dealt
with promptly.

(b) Mr Moir is reluctant to use electronic mail (email) in communicating with
the Authority, and has communicated exclusively by telephone and by
handwritten letter.

(c) Mr Moir has not demonstrated how he will submit regulatory information
to the Authority in a timely and efficient manner.

(d) Mr Moir has not provided the Authority with all the information it needs to
assess his application.

26. Having regard to these circumstances, the Authority cannot be satisfied that Mr
Moir is ready, willing and organised to comply with Principle 11 (Relations with
regulators) of the Authority’s Principles for Businesses and the rules in the
Supervision manual (SUP) of the Authority’s Handbook which relate to the
provision of information to the Authority.

27. In relation to threshold condition 2D, the Authority is not satisfied that Mr Moir
has appropriate non-financial resources. In reaching this conclusion, the Authority
has had regard to the following facts:

(a) Mr Moir’s application has repeatedly demonstrated a lack of understanding
of the regulatory system, for example, by not being clear about the
permissions that are actually required and asking the Authority to make a
determination for him.

(b) Mr Moir’s application remains incomplete and he has not submitted key
contractual and compliance documents to the Authority during the
application process, including:

i. Details of the terms for lending money, copies of contracts,
agreements and pre-contract information

ii. Supporting documents regarding late payments

iii. Details of fees charged

iv. Complaints handling procedures

(c) Mr Moir has not demonstrated how he intends to keep up with any
legislative changes, changes to the Authority’s Handbook or changes in
the Authority’s guidance. For example, he has neither provided details of
any concrete plans to engage suitably skilled staff or external resource to
advise him on these matters, nor given details of how else he intends to
achieve this.

(d) The Authority is not satisfied that Mr Moir could comply with the
requirement to submit regulatory returns via the Authority’s electronic
reporting system (GABRIEL).

28. Consequently, the Authority is not satisfied that Mr Moir has appropriate
resources in place, with particular regard to his lack of non-financial resources.

29. On the basis of the facts and matters described above, the Authority has
concluded that Mr Moir will not satisfy, and continue to satisfy, the threshold
conditions in relation to all of the regulated activities for which Mr Moir would
have permission if the application was granted.

IMPORTANT NOTICES

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

31. 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.

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

Authority contacts

33. For more information concerning this matter generally, contact Mike Baker,
Manager,
Credit
Authorisations
(direct
line:
020
7066
1026
/
email:
mike.baker@fca.org.uk).

Val Smith
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. Section 1B(5)(a) of the Act requires the Authority, in discharging its general
functions, to have regard to the regulatory principles in section 3B. These include
“the need to use [the Authority’s] resources...in the most efficient and economic
way”.

4. The threshold conditions are set out in schedule 6 of the Act. In brief, the
threshold conditions relate to:

(1)
Location of offices (paragraph 2B)

(2)
Effective supervision (paragraph 2C)

(3)
Appropriate resources (paragraph 2D)

(4)
Suitability (paragraph 2E)

(5)
Business model (paragraph 2F)

Relevant provisions of the Authority’s Handbook

5. 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 main considerations
in relation to the action specified are set out below.

Effective Supervision (Paragraph 2C of Schedule 6 to the Act)

6. COND 2.3.3.G(1) states that that in assessing the threshold conditions in
paragraph 2C the FCA will take into consideration whether it is likely that the FCA
will receive adequate information from the firm and those persons with whom the
firm has close links to determine whether the firm is complying with the
requirements and standards under the regulatory system for which the FCA is
responsible. 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 FCA.

Adequate Resources (Paragraph 2D of Schedule 6 to the Act)

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 2.4.1.A(4)(a) states that matters which are relevant in determining
whether a person has appropriate non-financial resources include the skills and
experience of those who manage the firm’s affairs.

9. COND 2.4.1.A(4)(b)(i) states that matters which are relevant in determining
whether a person has appropriate non-financial resources include whether a
person’s non-financial resources are sufficient to enable him to comply with
requirements imposed or likely to be imposed on a firm by the FCA in the course
of the exercise of its functions.

10. 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.