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FCA rejects lender’s application

FCA rejects lender’s application

A firm has had its application to carry on regulated activities as a lender rejected by the Financial Conduct Authority (FCA).

Secure Property Consultants Limited, based at 16 Johnson Street, Southall, applied under section 55a of the Financial Services and Markets Act 2000 for Part 4A permission to carry on regulated activities of entering into a regulated credit agreement as a lender and having the right to exercise lender’s rights and duties. 

The FCA felt that Secure Property Consultants had not understood the permissions it should have applied for with it submitting an application for nine consumer credit permissions. 

It was, however, not clear from the application form or business plan why the firm should require so many and it had also failed to supply sufficient material for the FCA to grant these permissions. 

In July 2015, Secure Property Consultants wanted to add mortgage permissions to its application with email correspondence between the FCA and the firm’s representatives establishing that it would remove credit broking from its permissions. 

Secure Property Consultants told the FCA that it had selected many of the permissions ‘just in case’ the client needed them and after discussions decided to remove several, leaving just two. 

After the FCA assessed Secure Property Consultants’ business model, it deemed it to be high risk as its operation depended on issuing loans to financially distressed customers. 

This meant Secure Property Consultants needed to satisfy the FCA that its staff would be trained adequately to comply with the TCF requirements imposed, or likely to be imposed by the regulator. 

The FCA noted that Secure Property Consultants’ business plan omitted any mention of TCF and determined that the business model would present risks to consumers. 

Finally, Secure Property Consultants told the FCA it would see a rapid growth by the 31st July 2017, which raised questions about how sufficient the firm’s resources were. 

When questioned about how it would achieve its growth rates, Secure Property Consultants did not provide enough detail of the measures it would take to achieve its growth targets. 

The FCA therefore concluded that it was concerned Secure Property Consultants were neither ready nor organised to comply with regulatory requirements and after inviting a representative for a second interview, the firm again failed to provide essential information on the firm’s compliance systems. 

This led to the FCA also being concerned that Secure Property Consultants had not dealt with the regulator in an open and co-operative way. 

The FCA therefore decided to refuse the application. 

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