FINAL NOTICE

To:

Wise Owl Services Limited (in liquidation)

Birmingham B

TAKE NOTICE: The Financial Services Authority of 25 The North Colonnade, Canary
Wharf, London E14 5HS (the “FSA”) gives Wise Owl Services Limited (in liquidation)
final notice of the cancellation of its Part IV permission

1.
ACTION

1.1
The FSA gave Wise Owl Services Limited (in liquidation) (“Wise Owl”) a Decision
Notice on 14 June 2011 which notified it that, for the reasons listed below and pursuant
to section 45 of the Financial Services and Markets Act 2000 (the “Act”), the FSA had
decided to cancel the permission granted to Wise Owl, pursuant to Part IV of the Act
(“Wise Owl’s Part IV permission”).

1.2
Wise Owl has agreed that it will not be referring this matter to the Upper Tribunal (Tax
and Chancery Chamber).

1.3
Accordingly, for the reasons set out below, the FSA issues this notice cancelling Wise
Owl’s Part IV permission.

2.
REASONS FOR THE ACTION

2.1
The FSA has concluded, on the basis of the facts and matters described below, that
Wise Owl is failing to satisfy the threshold conditions set out in Schedule 6 to the Act
(the “Threshold Conditions”). This is because, in the opinion of the FSA, Wise Owl’s
resources are not adequate in relation to the regulated activities it has permission to
carry on, and Wise Owl is therefore failing to satisfy Threshold Condition 4 (Adequate
resources). Specifically, Wise Owl has failed to meet its liabilities as they fell due, and
has failed to have competent and prudent management.

Relevant statutory provisions

2.2
The FSA’s regulatory objectives established in section 2(2) of the Act include
maintaining confidence in the financial system and the protection of consumers.

2.3
The FSA is authorised by section 45 of the Act to cancel an authorised person’s Part IV
permission, where it appears to the FSA that it is failing to satisfy the Threshold
Conditions.

2.4
Paragraph 4(1) of Schedule 6 to the Act sets out Threshold Condition 4, which states
that:

“The resources of the person concerned must, in the opinion of the Authority,
be adequate in relation to the regulated activities that it seeks to carry on, or
carries on.”


Relevant Handbook provisions

2.5
In exercising its power to cancel a Part IV permission, the FSA must have regard to
relevant provisions in the FSA Handbook of rules and guidance (the “FSA Handbook”).
The main provisions relevant to the action are set out below.

Guidance concerning the relevant Threshold Condition ("COND")

2.6
Guidance on the Threshold Conditions is set out in the Part of the FSA Handbook
entitled Threshold Conditions (“COND”).

COND 2.4 - Threshold Condition 4: Adequate resources (paragraph 4, Schedule 6 to
the Act)

2.7
COND 2.4.1UK(1) reproduces the relevant statutory provision that the resources of the
authorised person concerned must, in the opinion of the FSA, be adequate in relation to
the regulated activities that it seeks to carry on, or carries on.

2.8
COND 2.4.1UK(2) permits the FSA, when forming its opinion as to whether the
resources of an authorised person are adequate in relation to the regulated activities that

3

it carries on, to have regard to the provision it makes in respect of liabilities (including
contingent and future liabilities), and whether its human resources are adequate.

2.9
COND 2.4.4G(1) states that the FSA only takes into account relevant matters which are
material in relation to the regulated activities for which the authorised person has
permission.

2.10 COND2.4.4G(2)(a) states that such relevant matters may include whether there are any
indications that the authorised person will not be able to meet its debts as they fall due.

2.11 COND2.4.4G(2)(d) states that such relevant matters may also include whether the
authorised person has taken reasonable steps to identify and measure any risks of
regulatory concern that it may encounter in conducting its business, and has installed
appropriate systems and controls and appointed appropriate human resources to
measure them prudently at all times.

Relevant regulatory provisions

2.12 The FSA’s policy in relation to its enforcement powers is set out in the Enforcement
Guide (“EG”), certain provisions of which are summarised below.

2.13 EG 8.1(1) provides that the FSA may use its own initiative power to vary or cancel the
permission of an authorised firm under section 45 of the Act, where a firm is failing or
is likely to fail to satisfy the Threshold Conditions.

Cancelling a firm’s Part IV permission at the FSA’s own initiative

2.14 EG 8.13(1) states that the FSA will consider cancelling a Part IV permission using its
own-initiative power contained in section 45 of the Act in circumstances where the
FSA has very serious concerns about a firm, or the way its business is or has been
conducted.

2.15 EG 8.14 provides examples of the circumstances in which the FSA will consider
cancelling a Part IV permission. The failure to have or maintain adequate financial
resources (EG 8.14(3)) is specified as one such circumstance.

Facts and matters relied on

2.16 Wise Owl is a small mortgage and insurance mediation firm, whose main business
concerned building and life insurance. With effect from 24 November 2008, Wise Owl
was authorised and regulated by the FSA to carry on the following regulated activities
(those marked with an asterisk were limited to non-investment insurance contracts):

(1)
advising on investments (except on pension transfers and pension opt outs);

(2)
advising on regulated mortgage contracts;

(3)
agreeing to carry on a regulated activity;

(4)
arranging (bringing about) deals in investments;

(5)
arranging (bringing about) regulated mortgage contracts;

(6)
making arrangements with a view to regulated mortgage contracts; and

(7)
making arrangements with a view to transactions in investments

2.17 However, with effect from 3 August 2010, Wise Owl voluntarily varied its permission
such that it was no longer permitted to conduct any regulated activity as a result of the
FSA having identified that Wise Owl had previously ceased to trade, in or around July
2010. Alexander Simon Brincat (“Mr Brincat”) is the only approved person at Wise
Owl, holding the controlled function of CF1 (Director). He is also responsible for
insurance mediation.

2.18 Since at least March 2010, Wise Owl incurred significant debt, being commission
clawback payable to certain life insurance providers in the sum of £170,000. Wise Owl
did not ensure that it had sufficient financial resources with which to meet these
significant liabilities as they fell due.

2.19 In or around March 2010, Mr Brincat, the only approved person at Wise Owl, left the
United Kingdom for an indefinite period of time, with the effect that there was no
competent and prudent management at Wise Owl and there was no other approved
person to ensure that systems and controls are upheld and that Wise Owl’s regulatory
requirements are complied with.

2.20 One of Wise Owl’s insurance company providers petitioned for Wise Owl to be wound
up on 3 December 2010. This petition was granted on 3 March 2011 and Wise Owl is
now in liquidation.

2.21 The facts and matters described above lead the FSA, having regard to its regulatory
objectives, to the following conclusions:

•
Wise Owl has failed to ensure that it has a competent and prudent management by
which to conduct its business in compliance with proper standards and meet
regulatory requirements;

•
Wise Owl has failed to maintain adequate financial resources such that it could
meet its liabilities as they fell due;

•
these financial and human resources failings are significant and material in
relation to the regulated activities for which Wise Owl has permission and Wise
Owl is therefore failing to satisfy Threshold Condition 4 (Adequate resources).


3. DECISION MAKERS

3.1 The decision which gave rise to the obligation to give this Notice was made on behalf of
the FSA by the Settlement Decision Makers.

4. IMPORTANT

4.1 This Final Notice is given to Wise Owl in accordance with section 390 of the Act.


4.2 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 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 Wise Owl or prejudicial to the
interests of consumers.

4.3 For more information concerning this matter generally, you should contact Rachel West
in the Enforcement and Financial Crime Division of the FSA (direct line: 0207 066
0142).




………………………………………………………………

Tom Spender

FSA Enforcement and Financial Crime Division