FINAL NOTICE

Individual ref:
SXV01114

TAKE NOTICE: The Financial Services Authority of 25 The North Colonnade, Canary
Wharf, London E14 5HS (“the FSA”) gives you, Selvavinayakam Vigneswaran (“Mr
Vigneswaran”), final notice about the imposition of a financial penalty on you, the
withdrawal of your individual approval, and an order prohibiting you from performing
any function in relation to any regulated activity carried on by any authorised person,
exempt person or exempt professional firm:

1.
ACTION

1.1
The FSA gave, Mr Vigneswaran, a Decision Notice on 4 March 2010 (“the Decision
Notice”), which notified him that the FSA had decided:

(1)
to withdraw the approval given in respect of the performance of controlled
functions by Mr Vigneswaran, pursuant to section 63 of the Financial Services
and Markets Act 2000 (the “Act”);

(2)
to make an order, pursuant to section 56 of the Act, prohibiting him from
performing any function in relation to any regulated activity carried on by any
authorised person, exempt person or exempt professional firm (the
“Prohibition Order"); and

(3)
to impose a financial penalty of £250,000 on him, pursuant to section 66 of the

1

Act, for failing to comply with the FSA’s Statements of Principle for
Approved Persons.

1.2
The financial penalty consists of the following elements:

(1)
a penalty of £150,000 for submitting fraudulent applications for regulated
mortgage contracts; and

(2)
a penalty in the sum of £100,000 for deliberately misleading the FSA.

1.3
On 14 April 2010, Mr Vigneswaran made a reference to the Upper Tribunal (Tax and
Chancery Chamber) disputing the Decision Notice. On 5 August 2011, Mr
Vigneswaran withdrew his reference to the Upper Tribunal. The hearing of Mr
Vigneswaran’s reference was listed for 9 August 2011. The FSA did not object to Mr
Vigneswaran’s withdrawal of the reference. Accordingly, the FSA has taken the
action described in paragraph 1.1 above.

2.
REASONS FOR THE ACTION

2.1.
The FSA has concluded that Mr Vigneswaran is not fit and proper to carry out any
functions 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.

2.2.
On the basis of the facts and matters summarised below, and set out in more detail in
section 4 of this notice, the FSA has concluded that Mr Vigneswaran has failed to
meet minimum regulatory standards in terms of honesty and integrity, which includes
an obligation to comply with the requirements and standards of the regulatory system
and to be candid and truthful in all dealings with the FSA.

2.3.
Further, Mr Vigneswaran poses a risk both to consumers and lenders and to
confidence in the financial system. Moreover, this action should be taken against him
in support of the FSA’s financial crime objective.

2.4.
The FSA has also concluded that Mr Vigneswaran is guilty of misconduct owing to
his failure to comply with the Statements of Principle for Approved Persons issued
under section 64 of the Act, namely Statements of Principle 1 and 4. Accordingly, the
FSA considers that it is appropriate to impose a financial penalty of £250,000.

2.5.
In summary, Mr Vigneswaran admitted to the following misconduct:

(1)
submitting three mortgage applications in his parents’ names (two of which
were for regulated mortgage contracts) containing false information about their
income and employment;

(2)
commissioning and then supplying to lenders false payslips for his parents in
support of their mortgage applications;

(3)
setting up as an authorised person, another mortgage brokerage, Cherry
Finance Limited (“Cherry Finance”), using his father's identity and arranging

2

for his father to become an approved person without his knowledge or
understanding and then running the business himself; and

(4)
while acting as an approved person for Futture Finance Limited (“Futture”),
Mr Vigneswaran deliberately misled the FSA by providing the FSA with a
false reference wrongly representing that his father was employed by Futture
and was a competent and capable individual.

2.6.
The FSA has also concluded that Mr Vigneswaran:

(1)
submitted four mortgage applications in his own name through Futture for
non-regulated mortgage contracts containing false information about his
earnings;

(2)
routinely submitted false information and documents to lenders through
Futture on behalf of clients;

(3)
was knowingly concerned in the submission of false and misleading
information to lenders on behalf of clients of Cherry Finance.

3.
RELEVANT STATUTORY PROVISIONS, REGULATORY REQUIREMENTS
AND GUIDANCE

Statutory provisions

3.1
The FSA’s statutory objectives, set out in section 2(2) of the Act, include the protection
of consumers, the reduction of financial crime and the maintenance of market
confidence.

3.2
The FSA has the power, by virtue of section 56 of the Act, to make an order prohibiting
an individual from performing a specified function, any function falling within a
specified description, or any function, if it appears to the FSA that he is not a fit and
proper person to perform functions in relation to a regulated activity carried on by an
authorised person. Such an order may relate to a specified regulated activity, any
regulated activity falling within a specified description or all regulated activities.

3.3
The FSA may also withdraw the approval given to an individual under section 59 of the
Act by virtue of section 63 of the Act if the FSA considers that the individual is not a fit
and proper person to perform the function to which the approval relates. When
considering whether to withdraw its approval, the FSA may take into account any
matter which it could take into account if it were considering an application made
under section 60 of the Act in respect of the performance of the function to which the
approval relates.

3

3.4
Under section 66(1) of the Act, the FSA may impose a financial penalty on an
approved person if they are guilty of misconduct and the FSA is satisfied that it is
appropriate in all the circumstances to take action against them.

3.5 Section 66(2) of the Act states that a person is guilty of misconduct if, while an
approved person, they have failed to comply with a statement of principle for approved
persons (section 66(2)(a)) or they have been knowingly concerned in a contravention
by the relevant authorised person of a requirement imposed on the authorised person by
or under the Act (section 66(2)(b)).

Regulatory Requirements and Guidance

3.6
In deciding on the action, the FSA has had regard to relevant guidance published in the
FSA Handbook and the FSA’s Regulatory Guides, in particular in the Enforcement
Guide (“EG”), the Fit and Proper Test for Approved Persons (“FIT”), the Statements of
Principle and Code of Practice for Approved Persons (“APER”), Decision Procedure
and Penalties manual (“DEPP”) and the Enforcement Manual (“ENF”).

4.
FACTS AND MATTERS RELIED ON

4.1. Mr Vigneswaran was the sole director of Futture, which was a mortgage brokerage
based in Kingsbury, North West London and had been authorised by the FSA since 31
October 2004. He was the only approved person at Futture carrying out the following
controlled functions: CF1 (Director) and CF8 (Apportionment and Oversight). He was
also responsible for insurance mediation at the firm. Mr Vigneswaran was responsible
for the day-to-day activities and running of Futture and owned 100% of the issued share
capital in Futture.

Background to the FSA’s investigation

4.2. In October 2007, the FSA received a report from a lender (“Lender A”), informing it of
Futture’s removal from Lender A’s panel of mortgage intermediaries, as Futture was
suspected of submitting a number of mortgage applications containing false
information to another lender (“Lender B”). Lender B was concerned that these
applications contained false income and employment information, which included false
payslips and P60s.

4.3. Lender B provided the FSA with all the mortgage applications about which Lender B
had expressed concerns. The FSA reviewed these applications and found that they
contained false employment and income information. These applications included
applications for Mr Vigneswaran’s parents for which he was the mortgage broker.

4.4. On 24 April 2008, a search warrant was executed at Futture’s business premises and,
following a review of the seized materials, Mr Vigneswaran was interviewed by FSA
investigators on 20 August 2008. He acknowledged in interview that the mortgage
applications discussed in paragraphs 4.5 - 4.12 below contained false income and
employment details.

Parents’ mortgage applications

4.5. Mr Vigneswaran admitted in interview that he submitted two false mortgage
applications for his father, in October and November 2006, for properties that he
already owned.

4.6. The applications stated that his father was employed by an estate agency from 2
September 2003 as an Investment Consultant, earning £78,000 per annum. Mr
Vigneswaran is the sole director and 100% shareholder of that estate agency. In
interview, Mr Vigneswaran admitted that this information was false and that his father
was actually earning £5,000 per annum and assisted with simple administration at the
estate agency. When the FSA informed Mr Vigneswaran that Her Majesty’s Revenue
and Customs (“HMRC”) checks showed no record of income and tax payment for his
father for the years ending 2005 and 2006, Mr Vigneswaran failed to give an adequate
explanation, stating that he always passed employee information to Mr Vigneswaran’s
accountant who dealt with these issues.

4.7. Mr Vigneswaran’s father’s October 2006 application was supported by three payslips
which gave his father a monthly income of about £4,291 from the estate agency, which
equated to £78,000 per annum. Mr Vigneswaran’s father’s income was given as
£78,000 in both the October and November 2006 applications. When asked about the
origin of these payslips Mr Vigneswaran admitted that they were false. Mr
Vigneswaran explained that he asked a friend whose name and details he could not
recall to produce them for him. Mr Vigneswaran admitted that he commissioned these
false payslips for the sole purpose of obtaining fraudulent mortgages in his father’s
name.

4.8. Mr Vigneswaran also confirmed that he withdrew one of the mortgage applications
made in his father’s name after the lenders requested his father’s permission to contact
the Inland Revenue to verify his income. By way of an explanation Mr Vigneswaran
stated that he submitted these fraudulent mortgage applications in his father’s name to
manage his assets in response to his own divorce.

4.9. Mr Vigneswaran admitted in interview that he submitted a false mortgage application
for his mother, in November 2006, for a property that he already owned.

4.10. The application stated that his mother was employed as a full-time consultant from 6
October 2003 at Futture, earning £85,000 per annum. In interview, Mr Vigneswaran
admitted that this information was false and that she actually earned £5,000 per annum
and assisted with very basic administration at Futture. When the FSA informed Mr
Vigneswaran that HMRC checks showed no record of income and tax payment for his
mother, Mr Vigneswaran failed to give a clear answer and said that she was on the
payroll and that Mr Vigneswaran’s accountant dealt with all these issues.

4.11. Mr Vigneswaran also admitted that he cancelled the false mortgage application for his
mother after the lender requested proof of her income, which Mr Vigneswaran was
unable to provide honestly. Mr Vigneswaran explained that the reason he submitted the
mortgage application in his mother’s name was to transfer the ownership of the
property from himself to his mother. Mr Vigneswaran did this to safeguard his assets

5

from his wife with whom he was in divorce proceedings at that time.

4.12. Mr Vigneswaran stated that his parents were aware that he was using their identities to
submit false mortgage applications on their behalf as Mr Vigneswaran was in a
desperate situation at that time and asked them to help him to save his assets from being
claimed by his wife in the divorce proceedings. However, Mr Vigneswaran could not
confirm how much of the situation his parents actually understood. The FSA considers
that this explanation is unacceptable and that Mr Vigneswaran’s conduct in respect of
the submission of false mortgage applications in his parents’ names through Futture
demonstrates a complete lack of honesty and integrity.

Mr Vigneswaran’s mortgage applications

4.13. Between April 2004 and October 2005 Mr Vigneswaran submitted four personal
mortgage applications (for non-regulated mortgage contracts) to various lenders
through Futture, which contained false information about Mr Vigneswaran’s earnings.
The information that Mr Vigneswaran provided to the lenders did not correspond with
the earnings information that Mr Vigneswaran reported to HMRC.

4.14. Each of Mr Vigneswaran’s mortgage applications stated that Mr Vigneswaran was
employed as a Senior Consultant at Futture, earning £78,000 per annum, with an
additional £6,000 bonus and £15,600 rental income in 2005. In interview, Mr
Vigneswaran denied that he had submitted false mortgage applications in his own name
and maintained that he earned the amounts stated in the mortgage applications at the
time. When investigators informed Mr Vigneswaran that HMRC checks showed that
he earned significantly lower gross sums of money than recorded in these mortgage
applications. Mr Vigneswaran stated that his accountant was responsible for these
figures.

4.15. The FSA believes that this explanation is not credible given the substantial difference
between the amounts Mr Vigneswaran declared to HMRC and the income Mr
Vigneswaran described in the relevant mortgage applications. In the FSA’s opinion Mr
Vigneswaran deliberately and significantly inflated his income in documentation to the
lenders and obtained mortgages on the basis of these false declarations.

Futture’s client mortgage applications

4.16. From 1 April 2005 to 30 June 2008, Futture submitted 156 mortgage applications to
lenders. The FSA checked the income details of 7 applications highlighted by a lender
and a further 19 applications selected at random (including some joint applications)
(approximately 17% of Futture’s business) against the records held by HMRC. The
FSA has established that all 26 applications contained false and misleading
information: specifically the applicants’ income had been inflated on the mortgage
applications. Of those 26 applications, 23 (approximately 90%) named Mr
Vigneswaran or Mr Selva Warren as the sole adviser while one named Mr Vigneswaran
and Employee A. In interview, Mr Vigneswaran confirmed that he used the alias,
“Selva Warren”.

4.17. Given that Mr Vigneswaran admitted submitting fraudulent mortgage applications in

6

his parents’ names; the fraudulent mortgage applications made in his own name; the
high percentage of fraudulent applications discovered in a random sample of Futture’s
files; and the high percentage of fraudulent mortgage applications with Mr
Vigneswaran named as the adviser, the FSA considers that Mr Vigneswaran routinely
submitted fraudulent mortgage applications through Futture.

Mr Vigneswaran’s involvement in Cherry Finance

4.18. Futture was removed from a lender’s panel on 10 July 2007. The FSA was not
informed by Futture that it had been removed from Lender A’s panel. Mr
Vigneswaran admitted in interview that he failed to notify the FSA of the removal of
Futture from Lender A’s panel of mortgage intermediaries for submitting suspected
fraudulent mortgage applications.

4.19. However, in 2007, Mr Vigneswaran set up Cherry Finance under his father’s name
arranging for him to become an approved person. He is registered as the sole director
and is listed as carrying out the CF1 (Director) and CF8 (Apportionment and oversight)
controlled functions. He is also listed as being responsible for insurance mediation
carried out by Cherry Finance.

4.20. The compliance consultant engaged to assist preparing the authorisation application for
Cherry Finance confirmed to the FSA that Mr Vigneswaran approached his firm on
behalf of his father to request assistance in preparing an application to the FSA for
Cherry Finance. The compliance consultant stated that Mr Vigneswaran made clear at
the outset that his father would be the sole director of Cherry Finance but Mr
Vigneswaran would give guidance and assistance as necessary. He stated that the
application was completed based on information supplied either by Cherry Finance
directly or through Mr Vigneswaran. The only communication he had with Mr
Vigneswaran’s father was by way of written correspondence. Further, in Cherry
Finance’s application for authorisation, Futture was listed as its locum.

4.21. Cherry Finance’s authorisation application, sent to the FSA under cover of a letter
dated 4 July 2007, was supported by Mr Vigneswaran’s father’s curriculum vitae which
stated that from July 2004 to June 2007, he was employed as a Senior Business
Development Manager at Futture.

4.22. As part of the authorisation process for Cherry Finance, Mr Vigneswaran, as the
purported ex-employer of his father, was asked by the FSA whether Mr Vigneswaran
were aware of any specific concerns relating to Cherry Finance’s sole director (Mr
Vigneswaran’s father) with regard to his general level of competence, knowledge of
investment business and any other issues relevant to his authorisation application. On 4
September 2007, Mr Vigneswaran wrote to the FSA providing a reference in respect of
his father. Mr Vigneswaran’s reference explained that his father worked as a Senior
Business Development Manager at Futture from July 2004, dealing in all aspects of
mortgage business and non-investment insurance business and that he was a competent
and capable individual.

4.23. By Mr Vigneswaran’s own admission his father is not a senior business development
manager. He also does not possess any knowledge of mortgage advice or non-

7

investment insurance. At interview, contrary to what was stated in support of the
authorisation application for Cherry Finance, Mr Vigneswaran stated that his father
performed simple administrative tasks at the estate agency.

4.24. The FSA also conducted an interview with Mr Vigneswaran’s father in relation to his
involvement in Cherry Finance. His father cannot speak English; however, he stated,
through a translator, that he did not have any involvement with the day to day running
of Cherry Finance and that Mr Vigneswaran dealt with all business matters. He
demonstrated very limited knowledge of Cherry Finance, stating that he only
remembered attending an opening ceremony. He further stated that he had not applied
to the FSA for authorisation and was retired; he did not know whether he had made any
mortgage applications through Futture but said that he signed documents when asked to
do so by Mr Vigneswaran. It was clear from the interview with Mr Vigneswaran’s
father that he had no involvement with either Futture or Cherry Finance. However, this
was not apparent to the FSA when the application was considered by the FSA’s
authorisations department.

4.25. The FSA considers that, in reality, Mr Vigneswaran was running Cherry Finance.
When the search warrant was executed at Futture’s offices, the FSA discovered a
manuscript diagram headed ‘Own Business Plan’. It appears to be in Mr
Vigneswaran’s handwriting. This document lists items that need to be completed for
Cherry Finance’s authorisation which included completion of FSA registration
documents, CV, Company House forms, opening of a bank account and various other
items which would facilitate FSA authorisation. This document also listed items
relating to Futture; properties which Mr Vigneswaran owns; and a note of a question
from the compliance consultant in respect of Cherry Finance’s authorisation
application. A cheque book for Cherry Finance was also found.

4.26. Furthermore, on 29 September 2008, the FSA visited the offices of Cherry Finance,
which were located in a purpose built business centre. The FSA’s Enforcement staff
spoke to the centre manager who confirmed that the licence agreement for Cherry
Finance was signed by Mr Vigneswaran.

4.27. From 1 October 2007 to 30 June 2008, Cherry Finance submitted six mortgage
applications (including two joint applications) to lenders which completed. The FSA
reviewed these applications and checked the income details of the eight individual
applicants against the records held by HMRC. The FSA concluded that all six mortgage
applications contained false and misleading information; specifically the applicants’
income had been inflated on each of these mortgage applications. The adviser stated in
the six mortgage applications is Mr Vigneswaran’s father. However, various documents
within each of the files (such as the fee agreement, file check list and other
correspondence) name Selva Warren as the adviser or are signed by Mr Vigneswaran
under that name.

4.28. In light of paragraphs 4.19 to 4.27 above, the FSA concludes that Mr Vigneswaran
arranged for Cherry Finance to be set up in his father’s name and deliberately misled
the FSA as to who directed Cherry Finance. In establishing Cherry Finance Mr
Vigneswaran misled the FSA by:

(1)
arranging for the submission of the authorisation application for Cherry
Finance which contained false and misleading information.

(2)
being knowingly concerned in the submission of forms signed by his father to
apply to become an approved person in the knowledge that he would sign any
document Mr Vigneswaran put before him;

(3)
being knowingly concerned in the submission of his father’s curriculum vitae
which contained false and misleading information;

4.29. Mr Vigneswaran also provided the FSA with a false reference in support of his father’s
application to be an approved person, in Mr Vigneswaran’s capacity as an approved
person at Futture. In doing so, Mr Vigneswaran deliberately misled the FSA, stating
that his father had been employed by Futture as a Senior Business Development
Manager and was a competent and capable individual to be a principal of a mortgage
intermediary. Mr Vigneswaran followed this course of conduct despite being fully
aware of his responsibilities as an approved person to act with integrity, to be open and
cooperative with the FSA and to disclose appropriately any information of which the
FSA would reasonably expect notice. In fact Cherry Finance was always controlled
and managed by Mr Vigneswaran and his father had no involvement in the day-to-day
running of this business.

4.30. Mr Vigneswaran was also acting as a mortgage adviser at Cherry Finance and
submitted six fraudulent mortgage applications to the lenders naming his father as the
adviser beyond the locum arrangement between Cherry Finance and Futture. The FSA
considers that Mr Vigneswaran used Cherry Finance as a means of continuing his
fraudulent activities without having direct personal accountability for his actions as an
approved or authorised person. This further demonstrates his complete lack of honesty
and integrity.

5.
REPRESENTATIONS

5.1. Oral representations were made on Mr Vigneswaran’s behalf on 21 January 2010 and
documents were also submitted in support.

5.2. In summary, the representations were as follows:


(1)
Mr Vigneswaran accepted the FSA’s findings set out at paragraph 2.5 above in
relation to the applications submitted in his parents’ names, the commissioning
and supply of false payslips, setting up Cherry Finance and the provision of a
false reference to the FSA;

(2)
Mr Vigneswaran did not accept the FSA’s findings set out at paragraph 2.6
relating to the submission of mortgage applications in his own name and the
submission of applications on behalf of clients of Futture and Cherry Finance.

5.3.
Additional representations were made about matters which are no longer relied on by
the FSA.

Mr Vigneswaran’s mortgage applications

5.4. The representations made on Mr Vigneswaran’s behalf in relation to his own mortgage
applications were essentially as follows:

(1)
the FSA’s conclusion that Mr Vigneswaran inflated his income in the relevant
applications was based on information about his earnings obtained from HMRC.
However, there were a number of reasons why there might be a discrepancy
between income as stated in his mortgage applications (£78,000 in 2004 and
£99,600 in 2005) and income reported to HMRC;

(2)
at interview Mr Vigneswaran had sought to justify the discrepancy on the basis
that the figures that were reported to HMRC for the tax year ending April 2004
were not available to him at the time he made the first three applications (one in
April 2004 and two in October 2004). This was because Futture’s accounts for
the year ended 29 February 2004 (the “2004 Accounts”) were not signed off
until 3 December 2004. However, Mr Vigneswaran would have had an idea of
the volume of business being conducted and could have estimated his likely
income. The 2004 Accounts indicate that turnover increased from £41,961 in
2003 to £212,529 in 2004 and that gross profit increased from £36,679 to
£89,422. It was submitted that these are the figures that Mr Vigneswaran would
have had in mind when making the first three applications; and

(3)
the following year, Futture’s accounts for the year ended 28 February 2005,
signed off on 3 December 2005 (the “2005 Accounts”), indicate that turnover
had increased to £225,978 and gross profit to £103,175. At the time that the
fourth mortgage application was submitted in October 2005, Mr Vigneswaran
had the 2004 Accounts, Mr Vigneswaran knew that business had increased and
Mr Vigneswaran also had additional rental income from the properties already
acquired.

Mortgage applications on behalf of the clients of Futture and Cherry Finance

5.5. The representations made on Mr Vigneswaran’s behalf in relation to the mortgage
applications submitted on behalf of the clients of Futture and Cherry Finance were
essentially as follows:

(1)
HMRC records are not a sufficient basis on which to conclude that the income
of clients was inflated because, as set out above, there are a number of reasons
why a discrepancy might arise, particularly where the relevant applicants were
self employed (it being accepted that HMRC records were more relevant in
cases of employed applicants); and

(2)
in relation to the Futture applications, the results of the review carried out by the
FSA were not a fair basis on which to conclude that fraudulent applications had
been routinely submitted.

5.6. It was suggested during the representations that acceptance by the FSA of certain

representations must go some way to reducing the penalty. However, it was also
submitted that no representations were made in relation to the penalty and that the
proposed financial penalty might be appropriate in terms of the matters that had been
admitted.

6.
ANALYSIS OF MISCONDUCT AND SANCTION

Prohibition and withdrawal of approval

6.1. The FSA has considered whether Mr Vigneswaran is a fit and proper person to perform
any functions in relation to regulated activities. In doing so, the FSA has considered its
regulatory requirements and relevant guidance.

6.2. In assessing Mr Vigneswaran’s honesty, integrity and reputation for the purpose of
considering whether he is a fit and proper person, the FSA notes that Mr Vigneswaran
has admitted to the following:

(1)
deliberately submitting three false mortgage applications (two of which were for
regulated mortgage contracts) through Futture in the names of his mother and
father;

(2)
commissioning and supplying to lenders false payslips for his parents in support
of their mortgage applications;

(3)
misleading the FSA by providing a false reference which confirmed his father
was employed at Futture and was a competent and capable individual; and

(4)
setting up a mortgage brokerage using his father's identity and arranging for the
submission of an authorisation application and for his father to become an
approved person without his knowledge or understanding and then running the
business himself.

6.3. In relation to Mr Vigneswaran’s own mortgage applications, the FSA does not accept
Mr Vigneswaran’s explanations regarding the income figures that Mr Vigneswaran
included in these applications. All four mortgage applications (which were made in
2004 and 2005) include a basic income figure of £78,000. The 2005 mortgage
application also included a “bonus” figure of £6,000 as well as rental income of
£15,600. However, the 2004 Accounts indicate that directors’ emoluments increased
from £9,167 in 2003 to £10,000 in 2004 and that dividends increased from £10,000 in
2003 to £25,000 in 2004. The 2005 Accounts indicate that directors’ remuneration
decreased to £5,000 and dividends decreased to £12,000. Neither these figures, nor any
of the representations made or documentation submitted, justify Mr Vigneswaran’s
submission to lenders of an income figure of £78,000 which is inconsistent with both
the HMRC records and Futture’s audited accounts.

6.4. In considering Mr Vigneswaran’s representations, the FSA has also taken into account
his admissions of dishonesty in relation to his parents’ mortgage accounts, his conduct
in relation to the setting up of Cherry Finance and the false reference which Mr
Vigneswaran provided to the FSA.

6.5. In relation to the applications made on behalf of the clients of Futture and Cherry
Finance, the FSA notes that all 26 Futture applications that were reviewed, 19 of which

were selected at random, involved an income discrepancy. Mr Vigneswaran was
personally involved in 24 applications and at least 17 applications appear to relate to
employed applicants. The applicants reviewed represented 17% of Futture’s business.
The six Cherry Finance applications represent all the applications submitted to lenders
through Cherry Finance that completed. All six involved an income discrepancy, and
Mr Vigneswaran was personally involved in all six. There is no evidence that any of
the applicants were self-employed or to explain the discrepancies.

6.6. In these circumstances and given Mr Vigneswaran’s involvement in both sets of
applications, the high percentage of unexplained discrepancies found in a random
sample of files which named Mr Vigneswaran as the adviser and which appear to
involve employed applicants and Mr Vigneswaran’s admissions of dishonesty, the FSA
remains of the view that Mr Vigneswaran routinely submitted false information and
documents to lenders on behalf of Futture clients and were knowingly concerned in the
submission of false and misleading information to lenders on behalf of Cherry Finance
clients.

6.7. In light of Mr Vigneswaran’s conduct as set out above and the admissions Mr
Vigneswaran has made, the FSA concludes that Mr Vigneswaran lacks honesty and
integrity and is not fit and proper.

6.8. The FSA considers that Mr Vigneswaran poses a serious risk to lenders, to consumers,
and to confidence in the financial system, and also that action should be taken to
prevent Mr Vigneswaran from committing acts of financial crime. Therefore, the FSA
considers that this is a serious case of lack of fitness and propriety and as such, it is the
view of the FSA that Mr Vigneswaran’s approval should be withdrawn and Mr
Vigneswaran should be prohibited from performing any function in relation to any
regulated activity carried on by any authorised or exempt person or exempt professional
firm.

Financial penalty

6.9. Furthermore, the FSA considers it appropriate to impose a financial penalty under
section 66(1) of the Act in respect of Mr Vigneswaran’s conduct as an approved person
in submitting false mortgage applications and deliberately providing a false reference to
the FSA in breach of Statement of Principle 1 and Statement of Principle 4. In
determining an appropriate financial penalty the FSA has had regard to DEPP and, for
his conduct occurring prior to 28 August 2007, ENF which set out the factors that may
be of relevance in determining whether, and at what level it is appropriate to impose a
financial penalty. The FSA has considered the full circumstances of Mr Vigneswaran’s
conduct in determining that a financial penalty is appropriate in this case including the
following factors which it considers to be particularly relevant to a determination of the
level of the penalty.

6.10. The principal purpose of the imposition of this penalty is to promote high standards of
regulatory conduct by deterring other approved persons from acting in this manner. In
seeking to impose this penalty the FSA has also had regard to the need to ensure
approved persons act with integrity and do not abuse their positions in the financial
services industry by submitting fraudulent mortgage applications, obtaining fraudulent
mortgages for themselves and their clients and misleading the FSA in relation to

authorisation and approval applications. In addition, mortgage fraud directly
contributes to a lack of confidence in the mortgage market.

6.11. The FSA is also mindful of the need to punish Mr Vigneswaran in addition to imposing
a penalty which will serve as a credible deterrent to others.

The nature, seriousness and impact of the breach

6.12. The FSA considers that Mr Vigneswaran’s behaviour as an approved person, in
deliberately submitting fraudulent mortgage applications using his parents’ names
without their knowledge; being knowingly concerned in the submission of fraudulent
mortgage applications on behalf of clients and deliberately misleading the FSA in
respect of a separate mortgage brokerage is particularly serious, and warrants a severe
financial penalty. In particular, the large number of mortgage applications to which
reference is made in this Notice were submitted over a significant period in which Mr
Vigneswaran demonstrated a pattern of deliberate and repeated wrongdoing.

6.13. In addition, misleading the FSA by providing a false reference in support of an
application for Mr Vigneswaran’s father to become an approved person prevented the
FSA from making a proper determination of his fitness and propriety and allowed him
unmerited access to the advantages of approval. The FSA receives many applications
for authorisation and approval and regulates many small firms. To be able to achieve
its statutory objectives the FSA needs regulated persons to comply with the standards
and requirements of the regulatory system. In particular, the effective regulation of
authorised firms and approved persons requires the proactive co-operation of persons
dealing with the FSA. Action by an approved person to deliberately mislead the FSA,
particularly in the context of the authorisation and approval processes, key regulatory
tools by which the FSA seeks to authorise and approve only those applicants who are fit
and proper, is viewed particularly seriously.

6.14. The FSA has also taken into account the impact of combining mortgage fraud with the
provision of a false reference to the FSA. The reference supported the authorisation
application for Cherry Finance. The authorisation of Cherry Finance allowed Mr
Vigneswaran to continue to submit further false mortgage applications to lenders after
the removal of Futture from a lender’s panel without acquiring direct personal
responsibility as an approved or authorised person. The FSA has concluded that Mr
Vigneswaran’s conduct posed a significant risk to consumers and lenders and to
confidence in the financial system.

The extent to which the breaches were deliberate or reckless

6.15. The FSA considers that Mr Vigneswaran’s conduct was deliberate and Mr Vigneswaran
acted without concern for the risks they posed to the FSA, customers, lenders and the
financial services industry. By Mr Vigneswaran’s own admission:

(1)
he deliberately submitted three false mortgage applications (two of which were
for regulated mortgage contracts) through Futture in the names of his mother
and father; and

(2)
he commissioned, and supplied to lenders, false payslips for his parents in
support of their mortgage applications;

(3)
he misled the FSA by providing a false reference which confirmed his father
was employed at Futture and was a competent and capable individual.

6.16. The FSA’s consideration of all the relevant circumstances of this case also includes
taking account of the deliberate submission of fraudulent mortgage applications to
lenders on behalf of clients.

Whether the person on whom the penalty is to be imposed is an individual

6.17. The FSA recognises that, as an individual, the financial penalty to be imposed upon Mr
Vigneswaran is likely to have a significant impact, but also takes into account the need
for the financial penalty to be proportionate in relation to the seriousness of the
misconduct.

The size, financial resources and other circumstances of the of the person on whom the
penalty is to be imposed

6.18. The FSA has considered Mr Vigneswaran’s financial resources and other circumstances
based on the information available to it. There is no evidence to suggest that he is
unable to pay the financial penalty.

Disciplinary record and compliance history

6.19. The FSA has not previously taken disciplinary action against Mr Vigneswaran.

6.20. The FSA considers that the impact of combining mortgage fraud with the provision of a
false reference to the FSA in an authorisation and approval context merits a particularly
significant penalty. The FSA has also concluded that Mr Vigneswaran has breached
Statements of Principle 1 and 4 by failing act with integrity in carrying out his
controlled functions and failing, as an approved person, to deal with the FSA in a co-
operative way. In view of the seriousness of Mr Vigneswaran’s misconduct and, with
particular reference to the factors outlined above and having taken account of all the
relevant circumstances of the case, the FSA has decided to impose a financial penalty
of £250,000 on Mr Vigneswaran comprising the following elements:

(1)
a penalty of £150,000 for submitting fraudulent applications for regulated
mortgage contracts; and

(2)
a penalty in the sum of £100,000 for deliberately misleading the FSA.

7.
DECISION MAKER

7.1. The decision that gave rise to the obligation to give this Final Notice was made by the
Upper Tribunal.

8.
IMPORTANT

8.1. This Final Notice is given to you in accordance with section 390 (2) of the Act.

8.2. Manner of and time for payment

8.2
The financial penalty must be paid in full by you to the FSA by no later than 5
September 2011, 14 days after date of this Final Notice.

If the financial penalty is not paid

8.3
If all or any of the financial penalty is outstanding on 6 September 2011 the FSA may
recover the outstanding amount as a debt owed by you and due to the FSA.

8.4
Sections 391(4), 392(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 FSA
must publish such information about the matter to which this Notice relates as the
FSA considers appropriate. The information may be published in such manner as the
FSA considers appropriate. However, the FSA may not publish information if such
publication would, in the opinion of the FSA, be unfair to you or prejudicial to the
interests of consumers.

8.5.
The FSA intends to publish such information about the matter to which this Final
Notice relates as it considers appropriate.

FSA contacts

8.6
For more information concerning this matter, you should contact Paul Howick of the
Enforcement and Financial Crime Division at the FSA (direct line: 020 7066 7954) of
the FSA.

Tom Spender
Head of Department
FSA Enforcement and Financial Crime Division

ANNEX A

RELEVANT REGULATORY GUIDES AND GUIDANCE

1.
The Enforcement Guide (“EG”)

1.1.
The FSA’s approach to exercising its powers to make prohibition orders and
withdraw approvals is set out at Chapter 9 of the Enforcement Guide (“EG”).

1.2.
EG 9.1 states that the FSA’s power to make prohibition orders under section 56 of
the Act helps it work towards achieving its regulatory objectives. The FSA may
exercise this power where it considers that, to achieve any of those objectives, it is
appropriate either to prevent an individual from performing any function in relation
to regulated activities or to restrict the functions which he may perform.

1.3.
EG 9.4 sets out the general scope of the FSA’s powers in this respect, which include
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. EG 9.5 provides that the scope of a prohibition
order will vary according to the range of activities that the individual performs in
relation to regulated activities, the reasons why he is not fit or proper and the severity
of the risk posed by him to the consumers or the market generally.

1.4.
EG 9.8 to 9.14 provide additional guidance on the FSA’s approach to making
prohibition orders against approved persons and/or withdrawing such persons’
approvals. In particular, EG 9.8 states that the FSA may consider whether it should
prohibit that person from performing functions in relation to regulated activities,
withdraw that person’s approval or both. In deciding whether to withdraw approval
and/or make a prohibition order, the FSA will consider whether its regulatory
objectives can be achieved adequately by imposing disciplinary sanctions.

1.5.
EG 9.9 states that the FSA will consider all the relevant circumstances when deciding
whether to make a prohibition order against an approved person and/or to withdraw
that person’s approval. Such circumstances may include, but are not limited to, the
following factors:

(1)
whether the individual is fit and proper to perform functions in relation
to regulated activities. The criteria for assessing the fitness and propriety of
approved persons are set out in FIT 2.1 (Honesty, integrity and reputation);
FIT 2.2 (Competence and capability) and FIT 2.3 (Financial soundness).

(2)
whether, and to what extent, the approved person has:

(a) failed to comply with the Statements of Principle issued by the FSA
with respect to the conduct of approved persons; or

(b)
been knowingly concerned in a contravention by the relevant firm of a
requirement imposed on the firm by or under the Act.

(3)
the relevance and materiality of any matters indicating unfitness.

(4)
the length of time since the occurrence of any matters indicating unfitness.

(5)
the particular controlled function the approved person is (or was) performing,
the nature and activities of the firm concerned and the markets in which he
operates.

(6)
the severity of the risk which the individual poses to consumers and to
confidence in the financial system.

1.6.
EG 9.10 provides that the FSA may have regard to the cumulative effect of a number
of factors which, when considered in isolation, may not be sufficient to show that the
individual is fit and proper to continue to perform a controlled function or other
function in relation to regulated activities. The FSA may also take account of the
particular controlled function which an approved person is performing for a firm, the
nature and activities of the firm concerned and the markets within which it operates.

1.7.
EG 9.12 provides examples of types of behaviour which have previously resulted in
the FSA deciding to issue a prohibition order or withdraw the approval of an
approved person. The examples include:

(1)
Providing false or misleading information to the FSA; including information
relating to identity, ability to work in the United Kingdom, and business
arrangements.

(2)
severe acts of dishonesty, e.g. which may have resulted in financial crime.

(2)
serious breaches of the Statements of Principle for approved persons, such as
providing misleading information to clients, consumers or third parties.

2.
Fit and Proper Test for Approved Persons (“FIT”)

2.1
The section of the FSA Handbook entitled “FIT” sets out the Fit and Proper test for
Approved Persons. The purpose of FIT is to outline the main criteria for assessing the
fitness and propriety of a candidate for a controlled function and FIT is also relevant in
assessing the continuing fitness and propriety of an approved person.

2.2
FIT 1.3.1G provides that the FSA will have regard to a number of factors when
assessing a person’s fitness and propriety. Among the most important considerations
will be the person’s honesty, integrity and reputation.

2.3
In determining a person’s honesty, integrity and reputation, FIT 2.1.1G states that the
FSA will have regard to matters including, but not limited to, those set out in FIT
2.1.3G. This guidance includes:

(1)
whether the person has contravened any of the requirements and standards of
the regulatory system (FIT 2.1.3G(5)); and

(2)
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 (FIT 2.1.3G(13)).

3.
The Statements of Principle and Code of Practice for Approved Persons

3.1 The part of the FSA Handbook entitled the Statements of Principle and Code of
Conduct for Approved Persons ("APER") sets out the Statements of Principle in respect
of approved persons and provides examples of conduct which, in the opinion of the
FSA, do not comply with a Statement of Principle. It further describes factors which, in
the opinion of the FSA, are to be taken into account in determining whether or not an
approved person’s conduct complies with a Statement of Principle.

3.2
APER 3.1.3G states that, when establishing compliance with, or breach of, a Statement
of Principle, account will be taken of the context in which a course of conduct was
undertaken, including the precise circumstances of the individual case, the
characteristics of the particular controlled function and the behaviour to be expected in
that function.

3.3 APER 3.1.4G(1) provides that an approved person will only be in breach of a Statement
of Principle where he is personally culpable. Personal culpability arises where an
approved person's conduct was deliberate or where the approved person's standard of
conduct was below that which would be reasonable in all the circumstances.

3.4
In this case, the FSA considers the most relevant Statements of Principle to be
Statements of Principle 1, 2, 4 and 7.

3.5
Statement of Principle 1 provides that an approved person must act with integrity in
carrying out his controlled function.

3.6
APER 4.1 lists the types of conduct which do not comply with Statement of Principle 1.

3.7
APER 4.1.3E states that deliberately misleading (or attempting to mislead) by act or
omission a client; or the FSA does not comply with Statement of Principle 1. Specific
examples of such conduct are set out in APER 4.1.4E, which includes deliberately
falsifying documents; and deliberately providing false or inaccurate information to the
FSA.

3.8
APER 4.1.12E provides that deliberately designing transactions so as to disguise
breaches of requirements and standards of the regulatory system is conduct which
breaches Statement of Principle 1.

3.9
Statement of Principle 4 provides that an approved person must deal with the FSA and
with other regulators in an open and cooperative way and must disclose appropriately
any information of which the FSA would reasonably expect notice.

4.
Decision Procedure and Penalties manual (“DEPP”) and Enforcement Manual
(“ENF”)

4.1
DEPP 6 sets out the FSA’s policy in relation to imposing financial penalties. It was
previously set out in Chapter 13 of ENF. The FSA has had regard to both DEPP and
ENF as they both applied at separate times during the relevant period. DEPP and ENF
set out a non-exhaustive list of criteria that may be of particular relevance in

determining the appropriate level of financial penalty and whether to impose a penalty
upon an approved person.

4.2
DEPP 6.2.1G and ENF 13.3.1G provide that the FSA will consider the full
circumstances of each case when determining whether or not to take action for a
financial penalty. DEPP 6.2.1G also lists the factors which may be relevant when
deciding whether to impose a financial penalty. These include the nature, seriousness
and impact of the suspected breach.

4.3 DEPP 6.2.4G provides that the primary responsibility for ensuring compliance with a
firm’s regulatory obligations rests with the firm itself. However, the FSA may take
disciplinary action against an approved person where there is evidence of personal
culpability. Personal culpability arises where the behaviour was deliberate or where the
approved person's standard of behaviour was below that which would be reasonable in
all the circumstances at the time of the conduct concerned.

4.4
DEPP 6.5G and ENF 13.3.3G set out the factors that the FSA will consider when
determining the appropriate level of financial penalty. These factors include:

(1)
Deterrence;

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

(3)
The extent to which the breach was deliberate or reckless;

(4)
Whether the person on whom the penalty is to be imposed is an individual;

(5)
The size, financial resources and other circumstances of the person on whom
the penalty is to be imposed;

(6)
Disciplinary record and compliance history.