1

FINAL NOTICE


Date:
12 October 2020


1.
ACTION

1.1.
For the reasons given in this Final Notice, the Authority has decided to make an
order, pursuant to section 56 of the Act, prohibiting Mr Howson from performing
any function in relation to any regulated activities carried on by an authorised or
exempt person or exempt professional firm.


1.2.
Mr Howson has not referred the matter to the Tribunal within 28 days of the date
of which the Decision Notice was issued to him.

1.3.
Accordingly, the Authority hereby makes a prohibition order in respect of Mr
Howson. The prohibition order is effective from the date of this Final Notice.


2.
SUMMARY OF REASONS

2.1.
The Authority considers that Mr Howson lacks fitness and propriety. From 8 July
2013 to 21 November 2014 Mr Howson demonstrated a lack of honesty and
integrity.


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2.2.
During the Relevant Period, Vanguard was an authorised firm with two IFA
directors: Mr Howson and Mr Butterfield. In relation to Vanguard, Mr Howson held
various controlled functions including CF1 (Director).

2.3.
Through Vanguard, Mr Howson arranged for Vanguard’s customers:

(1)
in their own names, to purchase unlisted shares issued by Elysian Fuels
PLCs, with the assistance of limited recourse loans;

(2)
to transfer their existing pensions into SIPPs administered by James Hay,
as SIPP Provider; and

(3)
to sell the Elysian Fuels PLCs shares to their SIPPs with James Hay. Part
of these customers’ pension funds was thus extracted from their SIPPs,
and paid to them.

2.4.
James Hay considered the unlisted Elysian Fuels PLC shares which customers
purchased through their SIPPs to be high risk, non-standard investments. For
customers purchasing such assets through SIPPs which it administered, James Hay
required the completion of HNWI Declarations. Its policy was that its customers
should not use SIPPs to purchase unlisted shares unless they were HNWIs and had
signed an HNWI Declaration. From mid-February 2014 onwards, to reduce further
the likelihood of non-HNWIs purchasing unlisted shares through their SIPPs, James
Hay required customers either to supply evidence of their HNWI status or to have
an authorised representative (generally an IFA) sign a declaration confirming that
they had seen evidence of the customers’ net assets and HNWI status.

2.5.
Mr Howson dishonestly deceived James Hay as to customers’ HNWI status. He did
so for personal gain. He inputted financial information which he knew to be false
in respect of 6 customers, and submitted false HNWI Declarations to James Hay in
relation to those and other customers. He dishonestly circumvented James Hay’s
policy that only HNWIs should purchase unlisted shares through SIPPs. He did this
in order to increase the number of Vanguard customers who could purchase
unlisted Elysian Fuels PLC shares through their James Hay SIPPs and participate in
the Elysian Scheme. He thereby increased the substantial fees and commissions
received by Vanguard and HB Introductions when Vanguard’s customers purchased
Elysian Fuels PLC shares.

2.6.
Further, Mr Howson deceived James Hay about his own HNWI status so that,
despite not being an HNWI, he could use the Elysian Scheme to extract money from
his own pension. Again, he did this for personal gain.

2.7.
Mr Howson admitted to the Authority that during the Relevant Period he:


(1)
inputted figures which he knew to be fabricated as to the net assets of 6
customers into HNWI Declarations;

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(2)
caused those HNWI Declarations to be submitted in applications to James
Hay, representing to James Hay that these customers were HNWIs, when
he knew that they were not;

(3)
caused 27 HNWI Declarations to be submitted to James Hay on which he
declared that he had seen evidence of customers’ net assets and HNWI
status, when he knew that he had not; and

(4)
wrote fabricated figures as to his own net assets and HNWI status on
HNWI Declarations which were submitted to James Hay, representing to
James Hay that he was an HNWI, when he knew that he was not.

2.8.
Mr Howson’s conduct led customers to suffer loss. Had he not submitted false
HNWI Declarations to James Hay, then those Vanguard customers who were not
HNWIs would have been unable to participate in the Elysian Scheme and would not
have paid a substantial part of their pension moneys (3-5%) as fees to Vanguard.

2.9.
The Authority considers that Mr Howson acted in a way that lacked honesty and
integrity when he:

(1)
inputted financial information into applications for customers to a SIPP
Provider, and caused those applications to be submitted, knowing that
information to be false;

(2)
signed declarations representing to a SIPP Provider that he had seen
evidence to confirm customers’ HNWI status, when he had not; and

(3)
inputted false information relating to his own financial circumstances in
personal applications to a SIPP Provider, and submitted those
applications.

2.10. The Authority considers that Mr Howson is not fit and proper to perform any
function in relation to any regulated activities carried on by an authorised person,
exempt person or exempt professional firm, by reason of his dishonesty and lack
of integrity. The Authority has therefore made a prohibition order pursuant to
section 56 of the Act.

2.11. The 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. The ability of financial firms, such as SIPP
Providers, to trust, and rely upon, signed declarations received from other market
participants is fundamental to the operation and integrity of the UK’s financial
system. An individual who, for personal financial gain, consciously sets out
repeatedly to deceive other market participants over an extended period of time,
using false signed declarations and fabricated financial information about

customers and himself, poses a serious risk to consumers and to the UK financial
system.


3.
DEFINITIONS

3.1.
The definitions below are used in this 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;

“Mr Butterfield”


means John Leonard Butterfield;

“EG”
means the Authority’s Enforcement Guide;

“Elysian Fuels LLPs”
means the limited liability partnerships styled
as “Elysian Fuels No [XX] LLP”;

“Elysian Fuels PLCs”
means the Elysian Fuels entities styled as
“Elysian Fuels No [XX] PLC” in which investors
purchased preference shares;

“Elysian Scheme”
means the scheme involving the purchase of
shares in the Elysian Fuels PLCs and the
release of money from individuals’ pension
funds;

“FIT”
means the part of the Handbook entitled “Fit
and Proper Test for Employees and Senior
Personnel”;


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

“HB Introductions”
means
HB
Introductions
Limited
(now
dissolved), company number 08015923, of
which Mr Howson and Mr Butterfield were
directors and shareholders;

“HNWI”
means a High Net Worth Individual, being an
individual who in the previous financial year

5

had an annual income of £100,000 or more or
held net assets to the value of £250,000 or
more (but excluding the individual’s primary
residence and pension);

“HNWI Declaration”
means a declaration as to an individual’s HNWI
status requested by James Hay and to be
signed by the individual investor and (from
mid-February 2014, unless the individual
supplied supporting evidence) also by an
authorised representative (generally an IFA)
who had seen evidence to support the value of
the individual’s declared assets and liabilities;

“HMRC”



means Her Majesty’s Revenue and Customs;

“IFA”



means independent financial adviser;

“Introducer”
means
any
authorised
or
unauthorised
entity/individual that referred customers to
Vanguard;

“James Hay”
means the James Hay Partnership, the SIPP
Provider selected by Vanguard for customers
participating in the Elysian Scheme;

“the Relevant Period”
means the period from 8 July 2013 to 21
November 2014;

“RDC”
means the Regulatory Decisions Committee of
the Authority (see further at paragraph 7.3
below);

“SIPP”
means self-invested personal pension - an
arrangement which forms all or part of a
personal pension scheme, which gives the
member the power to direct how some or all of
the member's contributions are invested and
which allows investment of an individual’s
pension funds in (for example) unlisted shares,
among a range of other assets;

“SIPP Provider”
means a legal entity authorised by the
Authority with permission to operate SIPPs;

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

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“Vanguard”
means Vanguard Wealth Management Limited,
company
number
07827172
(now
in
liquidation);

“Warning Notice”
means the warning notice given to Mr Howson
dated 6 August 2020.


4.
FACTS AND MATTERS

Background

4.1.
Vanguard was a firm of independent financial advisers based in Leeds. It was
incorporated on 28 October 2011. Mr Howson and Mr Butterfield were equal
shareholders and together had a controlling share of the company.

4.2.
From 7 February 2012, Vanguard had permission to carry on the following regulated
activities:

(1)
Advising on investments (except on Pension Transfers and Pension Opt
Outs);

(2)
Advising on P2P agreements;

(3)
Advising on Pension Transfers and Pension Opt Outs;

(4)
Agreeing to carry on a regulated activity;

(5)
Arranging (bringing about) deals in investments; and

(6)
Making arrangements with a view to transactions in investments.

4.3.
Following a request by the Authority, on 4 May 2016 Vanguard signed a document
applying for certain requirements to be included in its permissions under Part 4A of
the Act. On the imposition of the requirements under section 55L of the Act,
Vanguard was required immediately to cease the regulated activities of advising on
investments, arranging deals in investments and making arrangements with a view
to transactions in investments until certain conditions were met.

4.4.
Vanguard was placed into liquidation on 23 June 2016.

Roles and responsibilities at Vanguard

4.5.
During the Relevant Period, Mr Howson was approved by the Authority to hold the
CF1 (Director), CF10 (Compliance Oversight), CF11 (Money Laundering Reporting
Officer) and CF30 (Customer) controlled functions in relation to Vanguard.

4.6.
Mr Howson said that he and Mr Butterfield were “both in charge” of Vanguard and
that indirectly they both “did the same job”. Mr Howson referred to himself as
being more “the sales advisor”.

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The Elysian Scheme

4.7.
The Elysian Fuels PLC shares were promoted using offer documents which were
aimed at certified HNWI and self-certified sophisticated investors.

4.8.
The offer documents described the Elysian Fuels PLCs and Elysian Fuels LLPs as an
opportunity to invest in a partnership which originated and developed renewable
energy projects and technologies in conjunction with an energy developer.
Numerous Elysian Fuels LLPs and Elysian Fuels PLCs were established.

4.9.
Investors were invited to purchase unlisted shares in an Elysian Fuels PLC and an
interest in an Elysian Fuels LLP. The offer documents stated that there was a plan
to list the Elysian Fuels PLC shares but, as far as the Authority has been able to
determine, the only such company which listed shares was Elysian Fuels No 20 PLC,
and its shares were later delisted. The offer documents identified a wide range of
risks connected with investment in Elysian Fuels PLCs and LLPs.

4.10. James Hay was the main SIPP Provider whom Vanguard chose to use for the Elysian
Scheme. James Hay considered investments in such unlisted shares to be high-risk
non-standard investments. It required investors purchasing them through SIPPs to
sign risk warnings. James Hay’s policy was that its customers should not use SIPPs
to purchase unlisted shares unless they were HNWIs and had signed an HNWI
Declaration. HNWI status was part of James Hay’s acceptance requirement for
certain types of non-standard investments where the adviser had appropriately
assessed their customers as an HNWI.

4.11. During the Relevant Period, through Vanguard, Mr Howson arranged for customers
to take the following steps:

(1)
The customers purchased shares in Elysian Fuels PLCs for £1 per share.

(2)
The £1 per share price was partly funded by an 83.4p per share limited
recourse loan, whose terms, according to Mr Howson, meant that
customers would not have to repay it. The balance of 16.6p per share
was funded by customers.

(3)
The customers transferred their existing pensions into SIPPs. Vanguard
charged customers a fee of 3 - 5% of the value of the amount transferred.

(4)
The customers sold the Elysian Fuels PLC shares to their own SIPPs for
£1 per share.

4.12. As a result, the Customers received the purchase price of £1 per share paid by their
SIPPs, less 3-5% in fees charged by Vanguard and less 16.6p per share.

4.13. A SIPP is an arrangement which forms all or part of a personal pension scheme and
which gives the customer the power to direct how some or all of their pension
contributions are invested. Unlisted shares can be purchased through some SIPPs.


4.14. The Elysian Scheme allowed customers, for example, to purchase 100,000 Elysian
Fuels PLC shares with a nominal value of £1 per share for an outlay of £16,600 and
then sell those shares at the full nominal value to their SIPPs and receive £100,000
from the SIPPs. The net outcome for the customer was the receipt of £83,400 from
their pension funds in the SIPP (less Vanguard’s 3-5% fees), whilst their SIPP held
100,000 Elysian Fuels PLC shares with a nominal value of £100,000.

4.15. The Authority is not aware of any attempts to recover any part of the 83.4p per
share limited recourse loans.

Elysian Fuels PLC shares became worthless

4.16. The final tranche of shares in Elysian Fuels PLCs was sold in December 2014.
According to minutes of an “Elysian LLPs Meeting”, on 20 January 2016 it was
announced that “the shares held by investors in the limited companies or the PLCs
are likely to be worthless”.

4.17. Most of the Elysian Fuels LLPs and Elysian Fuels PLCs are now in liquidation or
dissolved.

4.18. Pension law during the Relevant Period allowed those of 55 years of age or more
to withdraw up to 25% of their pensions on a tax-free basis. However, using the
Elysian Scheme, customers (including those below the required age) sought to
withdraw more than 25% of their pension funds without incurring a tax liability.
However, an unauthorised pension withdrawal might result in a 55% tax liability
for the member.

4.19. HMRC are pursuing unauthorised payment charges against all investors. Such tax
charges would be between 40% and 55% of the unauthorised pension withdrawal,
depending on the circumstances. Some customers have submitted compensation
claims to the Financial Services Compensation Scheme arising from the Elysian
Scheme.

Vanguard’s customer “fact find” process

4.20. During the period in which it carried on regulated activities, approximately 80% of
Vanguard’s customers were introduced through authorised and unauthorised
Introducers and the remaining 20% of customers came to Vanguard directly. Of
those customers that came through Introducers, approximately 70% of customers
were introduced through unauthorised Introducers. Approximately 80% of
Vanguard’s business related to pension transfers into SIPPs. During 2013 and 2014,
of that pension transfer business, a little less than 90% related to the Elysian
Scheme.

4.21. At Vanguard, a “fact find” process was undertaken with new customers. An
Introducer or Vanguard would establish a customer’s financial circumstances but it
varied as to who carried this out; some customers completed a fact find with the

Introducer and others with Vanguard. The Vanguard fact find questionnaire had
sections specifically to seek details from customers of their income and assets.

4.22. Vanguard did not seek evidence to test the information supplied by its customers
concerning their assets and income.

HNWI Declarations required by James Hay


4.23. Vanguard submitted various documents to James Hay so that Elysian Fuels PLC
shares could be purchased by customers’ SIPPs following transfer of their pensions
into those SIPPs.

4.24. James Hay’s policy was that it would not allow its customers to purchase unlisted
shares through SIPPs unless they had completed an HNWI Declaration.

4.25. James Hay changed its HNWI Declarations in mid-February 2014. Its HNWI
Declarations before mid-February 2014 required customers to sign declarations in
the following terms:

“I am a certified high net worth individual because at least one of the
following applies:

(a) I had, during the financial year immediately preceding the date below,
an annual income to the value of £100,000 or more;

(b) I held, throughout the financial year immediately preceding the date
below, net assets to the value of £250,000 or more. Net assets for these
purposes do not include:
- the property which is my primary residence or any loan secured on that
residence;
…”

4.26. In addition, the HNWI Declarations pre-dating mid-February 2014 included a page
on which the customer’s assets and liabilities were to be listed and the customer’s
“net worth” was to be shown.

4.27. From mid-February 2014 onwards, James Hay’s HNWI Declarations remained
materially identical to their previous format but additionally required either that
customers enclose evidence of the net assets which they claimed to have or that
customers’ authorised representatives provided a signed declaration that they had
seen evidence of these assets.

4.28. James Hay told the Authority that it expected a customer’s authorised
representative to have undertaken appropriate customer due diligence and a “Know
Your Customer” exercise before signing an HNWI Declaration. James Hay’s policy
was that customers should not be permitted to purchase unlisted shares through
SIPPs unless an HNWI Declaration had been received.

4.29. The full text of the additional declaration required after mid-February 2014 was as
follows:

“ I confirm that I act as an Authorised Representative for the above named
Client and confirm I have seen evidence to support the value of the
Client’s personal assets & liabilities listed above.

 I enclose evidence to support the value of the personal assets &
liabilities listed above.

False HNWI Declarations for customers submitted to James Hay

4.30. Mr Howson knew that if a customer was not an HNWI, they should not have
purchased Elysian Fuels PLC shares. Further, Mr Howson understood that James
Hay did not think it was appropriate for individuals who were not HNWIs to
participate in the Elysian Scheme.

4.31. Between 26 February 2014 and 21 November 2014, Mr Howson signed 27 HNWI
Declarations which Vanguard submitted to James Hay and on which he declared
that he, as his customers’ authorised representative, had seen evidence of their
listed net assets. However, Mr Howson admitted to the Authority that he did not
see evidence of the net assets for any of these customers.

4.32. Further, Mr Howson admitted to the Authority that in the case of 6 customers who
he knew were not HNWIs, he inputted fabricated figures for their net assets on
their HNWI Declarations, representing to James Hay that these customers had
sufficient assets to qualify as HNWIs when he knew that they did not.

4.33. Mr Howson was asked about those 6 customers in interview.

(1)
In relation to Customer A, Mr Howson admitted that when he submitted
the HNWI Declaration to James Hay he knew that Customer A was not an
HNWI.

(2)
In relation to Customer B, again Mr Howson admitted knowing that the
customer was not an HNWI and that the HNWI Declaration was completed
“incorrectly”.

(3)
When asked about Customer C, Mr Howson agreed that he knew the
customer was not an HNWI and had entered false figures on their HNWI
Declaration to “make the sums add up”.

(4)
Regarding Customer D, Mr Howson told the Authority that when writing
figures for asset values on the HNWI Declarations, in order to represent

the customer as an HNWI when he knew the customer was not, “we just
basically made them up”.

(5)
In relation to Customer E, Mr Howson told the Authority that he had made
up figures for assets to include two investment properties, knowing that
Customer E rented his home and owned no properties at all and, along
with the fictitious properties, Mr Howson made up figures for fictitious
mortgages.

(6)
In relation to Customer F, Mr Howson admitted to knowing the customer
was not an HNWI and stated that the figures on the HNWI Declaration
were “just made up”.

4.34. For those 6 customers, the details about their income, assets and liabilities were
declared by Mr Howson to be true when he knew that in reality they had been
deliberately inflated and/or fabricated in order falsely to enter the customer into
the Elysian Scheme, for which they were not in fact eligible.


False HNWI Declarations on Mr Howson’s own applications to James Hay

4.35. Mr Howson himself had a SIPP with James Hay. In July 2013 and April 2014, he
submitted HNWI Declarations to James Hay containing false information about
himself in order to sell two tranches of Elysian Fuels PLC shares to his own SIPP.
In so doing, Mr Howson caused money to be released from his own pension through
the Elysian Scheme.

4.36. His first HNWI Declaration is undated. The covering letter accompanying the
declaration is dated 8 July 2013. It was for the purchase of 11,000 Elysian Fuels
No 24 PLC shares.

4.37. The second HNWI Declaration, dated 14 April 2014, was for the purchase of 20,000
shares in Elysian Fuels No 32 PLC.

4.38. On each of these two signed HNWI Declarations, Mr Howson stated that he had
total net assets, excluding his residential home and pension, of £295,000 with no
liabilities. Those supposed assets included an investment property valued at
£130,000 and shares valued at £75,000.

4.39. Mr Howson admitted to the Authority that he was not an HNWI and that he had
entered false values for assets on the HNWI Declarations submitted to James Hay.
Mr Howson admitted that he had never owned a property, had never owned the
shares referred to and was not an HNWI when he signed and submitted the HNWI
Declarations.

4.40. Mr Howson’s second HNWI Declaration followed the introduction of the new format
introduced by James Hay in mid-February 2014 and so required the submission of
evidence of HNWI status or certification by an authorised representative that they
had seen evidence of the net assets declared. Mr Howson, knowing that the figures

he had written on the form were false, also certified that he had seen evidence of
his own assets, purporting to provide this certification as his own authorised
representative.


Financial gain from the dishonest HNWI Declarations


4.41. Mr Howson had a financial incentive to represent customers as HNWIs when they
were not because this allowed more customers to participate in the Elysian Scheme,
generating more fees and commissions for Vanguard and HB Introductions.

4.42. Customers paid an advice fee of 3-5% of the total pension transfer amount to
Vanguard upon transfer of their pension funds from their prior pension schemes
into SIPPs with James Hay. There was thus a personal benefit for Mr Howson, as
a shareholder and director of Vanguard, if the number of customers participating
in the Elysian Scheme increased. Vanguard received pension transfer fees of around
£317,700 from customers participating in the Elysian Scheme from mid-February
2014 to the end of the Relevant Period.

4.43. Mr Howson and Mr Butterfield were also directors and shareholders of HB
Introductions throughout the Relevant Period. HB Introductions was set up by Mr
Howson and Mr Butterfield to receive, among other sums, commission payments
from another party for introductions of customers who purchased shares in Elysian
Fuels PLCs. Between April 2012 and March 2015, HB Introductions received a
commission of 2% of the share price for each Elysian Fuels PLC share purchased
by Vanguard’s customers. The total commission paid to HB Introductions from
mid-February 2014 to the end of the Relevant Period was around £132,700.

4.44. Vanguard and HB Introductions shared a proportion of their fees with Introducers
who had referred customers to Vanguard.

4.45. From mid-February 2014 to the end of the Relevant Period, the advice fees and
commissions received by Vanguard and HB Introductions totalled approximately
£450,400. Had Mr Howson not submitted false HNWI Declarations to James Hay,
then this income would have been reduced. Mr Howson admitted that 6 customers
were not HNWIs. Further, had he insisted on seeing evidence of the HNWI status
of the 27 other customers referred to in paragraph 4.31 before certifying on HNWI
Declarations that he had seen evidence of their net assets, he may have found that
some of those customers did not qualify as HNWIs and were not eligible to
participate in the Elysian Scheme. The fees and commissions received by Vanguard
and HB Introductions would then have been less.

4.46. Further, by deceiving James Hay about his own HNWI status, Mr Howson was able
to participate in the Elysian Scheme himself and had the majority of the moneys in
his pension released to him. Since he was not an HNWI, he could not have obtained
this financial benefit without misrepresenting his net assets to James Hay.



Customer loss from the dishonest HNWI Declarations

4.47. Mr Howson’s conduct led customers to suffer loss. Had he not submitted false
HNWI Declarations to James Hay, then those Vanguard customers who were not
HNWIs would have been unable to participate in the Elysian Scheme and would not
have paid a substantial part of their pension moneys (3-5%) as fees to Vanguard.


5.
FAILINGS

5.1.
The statutory and regulatory provisions relevant to this Notice are referred to in
Annex A.

5.2.
By reason of the facts and matters set out above, the Authority considers that Mr
Howson is not fit and proper because he lacks honesty and integrity. In particular,
over an extended period and for personal gain, he dishonestly:

(1)
inputted financial information into applications for customers to a SIPP
Provider, and caused those applications to be submitted, knowing that
information to be false;

(2)
signed declarations falsely representing to a SIPP Provider that he had
seen evidence to confirm customers’ HNWI status; and

(3)
inputted false information relating to his own financial circumstances into
personal applications to a SIPP Provider, and submitted those
applications.


6.
SANCTIONS

6.1.
Mr Howson’s deliberate misrepresentations to another market participant over a
prolonged period, for personal gain and to circumvent safeguards for non-HNWIs,
meant that his conduct fell below the standard expected of those working in the
financial services industry. The ability of SIPP Providers and other financial firms
to trust, and rely upon, signed declarations made by other market participants is
of fundamental importance to the integrity of the UK’s financial system.

6.2.
In the light of the serious nature of his dishonest misconduct, the Authority
considers that Mr Howson poses a serious risk to consumers and the integrity of
the UK financial system and is not a fit and proper person to perform any function
in relation to any regulated activities carried on by an authorised person, exempt
person or exempt professional firm.

6.3.
The Authority considers that Mr Howson is not fit and proper and that it is
appropriate and proportionate in all the circumstances (including the nature and
seriousness of Mr Howson’s failings) to impose an order prohibiting him from
performing any function in relation to any regulated activities carried on by an
authorised person, exempt person or exempt professional firm.

6.4.
The Authority has had regard to the guidance set out at Chapter 9 of EG in deciding
to impose these sanctions. The relevant provisions of EG are set out in Annex A.

6.5.
These sanctions support 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.


7.
REPRESENTATIONS

7.1.
Through the Warning Notice, the Authority gave notice that it proposed to take the
action described above and Mr Howson was given the opportunity to make
representations to the Authority about that proposed action.

7.2.
Following receipt of the Warning Notice, Mr Howson wrote to the Authority and
stated that he did not accept the Authority’s findings (as set out above), but that
he did not wish to make any representations on the Warning Notice.

7.3.
The Authority has therefore taken the action for the reasons set out above.


8.
PROCEDURAL MATTERS

8.1.
This Final Notice is given to Mr Howson under, and in accordance with, section 390
of the Act.

8.2.
The following paragraphs are important.

Decision maker

8.3.
The decision which gave rise to the obligation to give this Notice was made by the
RDC. The RDC is a committee of the Authority which takes certain decisions on
behalf of the Authority. The members of the RDC are separate to the Authority staff
involved in conducting investigations and recommending action against firms and
individuals. Further information about the RDC can be found on the Authority’s
website here:

https://www.fca.org.uk/about/committees/regulatory-decisions-committee-rdc

Publicity

8.4.
Section 391(4), 391(6) and 391(7) of the Act apply to the publication of information
about the matter to which this notice relates.

8.5.
Under those provisions, the Authority must publish such information about the
matter to which this Final Notice relates as the Authority considers appropriate. The
information maybe published in such manner as the Authority considers

appropriate. However, the Authority may not publish information in respect of this
matter if, in the opinion of the Authority, such publication would be unfair to Mr
Howson, or prejudicial to the interest of consumers or detrimental to the stability
of the UK financial system.

8.6.
The Authority intends to publish this Final Notice and such information about the
matter to which the Final Notice relates as it considers appropriate.

Authority contacts

8.7.
For more information concerning this matter generally, contact Andrew Baum at
the Authority (direct line: 020 7066 8898/email: Andrew.Baum@fca.org.uk).


Bill Sillett

Head of Department, Enforcement and Market Oversight Division

Financial Conduct Authority





ANNEX A

RELEVANT STATUTORY AND REGULATORY PROVISIONS

1. The Act

1.1.
The Authority’s operational objectives, set out in section 1B(3) of the Act, include
securing an appropriate degree of protection for consumers and protecting and
enhancing the integrity of the UK financial system.

1.2.
Section 56 of the Act provides that the Authority may make a prohibition order if it
appears to the Authority that that individual is not a fit and proper person to
perform functions in relation to a regulated activity carried on by an authorised
person, exempt person or a person to whom, as a result of Part 20, the general
prohibition does not apply in relation to that activity. Such an order may relate to
a specified regulated activity, any regulated activity falling within a specified
description, or all regulated activities.

2. The Fit and Proper Test for Employees and Senior Personnel

2.1.
The purpose of FIT is to outline the criteria that the Authority will consider when
assessing the fitness and propriety of a candidate for a controlled function and may
consider when assessing the continuing fitness and propriety of an approved
person.

2.2.
FIT 1.3.1G states that the Authority will have regard to a number of factors when
assessing the fitness and propriety of a person to perform a particular controlled
function. The most important considerations will be the person’s honesty, integrity
and reputation, competence and capability and financial soundness.

2.3.
FIT 2.1.1G provides that in determining a person’s honesty, integrity and
reputation, the Authority will have regard to all relevant matters including but not
limited to those set out in FIT 2.1.3G, which include: whether the person has
contravened any of the requirements or standards of the regulatory system (FIT
2.1.3G(5)); whether in the past the person has been candid and truthful in all his
dealings with any regulatory body, and whether the person demonstrates a
readiness and willingness to comply with the requirements and standards of the
regulatory system and with other legal, regulatory and professional requirements
and standards (FIT2.1.3G(13)).


3.
The Enforcement Guide

3.1.
EG sets out the Authority’s approach to exercising its main enforcement powers
under the Act. The Authority’s policy in relation to prohibition orders is set out in
Chapter 9 of the Enforcement Guide.

3.2.
EG 9.1.1 states that the Authority may exercise the power, under section 56 of the
Act, to make a prohibition order where it considers that, to achieve any of its
statutory 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.

3.3.
EG 9.2.2 states that the Authority has the power to make a range of prohibition
orders depending on the circumstances of each case and the range of regulated
activities to which the individual’s lack of fitness and propriety is relevant.

3.4.
EG 9.2.3 provides that the scope of the prohibition order will depend on the range
of functions that the individual performs in relation to regulated activities, the
reasons why he is not fit and proper and the severity of risk which he poses to
consumers or the market generally.

3.5.
EG 9.3.2 states that when deciding whether to make a prohibition order the
Authority will consider all the relevant circumstances of the case, which may include
(but are not limited to):

(1)
EG 9.3.2(2): whether the individual is fit and proper to perform functions
in relation to regulated activities. The criteria for assessing fitness and
propriety are set out in FIT 2.1 (honesty, integrity and reputation), FIT
2.2. (competence and capability) and FIT 2.3 (financial soundness);

(2)
EG 9.3.2(5): the relevance and materiality of any matters indicating lack
of fitness;

(3)
EG 9.3.2(8): the severity of the risk which the individual poses to
consumers and to confidence in the financial system.

3.6.
EG 9.3.5 provides examples of the types of behaviour which have previously
resulted in the Authority deciding to impose prohibition orders. The examples
include providing false or misleading information to the Authority and serious
breaches of the Authority’s Statements of Principle and Code of Practice for
Approved Persons, such as providing misleading information to third parties.