FCA weeks in review November 6 – 17, 2023

A raft of enforcement actions head our roundup of recent FCA activity, plus there’s important guidance on ESG reporting.


The regulator expressed disappointment with the way firms handled the victims of automated push payment (APP) fraud, and urged greater effort be devoted to “deliver good consumer outcomes”.

UK Finance’s Half Year Fraud Update found that over 116,000 people reported they were the victims of APP fraud. The FCA referred businesses to two of its publications detailing how firms should be handling these cases.

An update on the Settlement Scheme proposed by Link Fund Solutions in relation to the LF Equity Income Fund was published. The FCA said it “considers the scheme to be the quickest and best way to return as much money as possible investors compared to other means”.

If the Scheme is approved, a settlement fund of up to £230m ($281m) will be created for relevant investors.

A hard-hitting Dear CEO letter was sent to wealth management and stockbroking firms setting out the regulator’s expectations on preventing financial crime and implementing the UK Consumer Duty. While there was little of substance that was new in the letter, the decision to communicate directly suggests enforcement actions are being lined up.

KBFS Financial Limited has been prevented from carrying out regulated activities for failure to pay redress to former members of the British Steel Pension Scheme, and for failing to work with the FCA in an open and cooperative way. A First Supervisory Notice has been issued.

A restraint order under the terms of the Proceeds of Crime Act 2002 has been obtained against WeathTek LLP. The purpose of the order is to preserve assets in order to make them available for a future confiscation order following a criminal conviction. The FCA is undertaking an ongoing regulatory and criminal investigation into WealthTek relating to breaches of regulations relating to client money and criminal offences of fraud and money laundering.

Financial adviser Larry Barreto and chartered accountant Tassib Hussain have been found guilty of making £3m ($3.73m) worth of fraudulent mortgage applications. Barretto gave mortgage advice to clients without being authorized to do so by the FCA, and dishonestly inflated applicants’ income to the lender in 11 cases. He charged clients a fee which he then paid in cash to Hussain, who created false self-employment and employment documentation.

As a result, lenders granted mortgages to a number of applicants on a false basis, leaving them at greater risk of loss.

Barreto had been struck off as a financial adviser by the Personal Investment Authority in 1996, and prohibited from carrying on regulated activity by the Financial Services Authority in 2004. Sentencing is scheduled for February 23, 2024.

NMC Health plc has been censured for misleading the market about its debt. The UAE-headquartered healthcare operator entered the FTSE in 2017 and, between March 2019 and February 2020, published financial statements containing materially inaccurate information about its debt by as much as $4 billion.

NMC went into administration in April 2020 and material subsequently secured by the FCA, with co-operation from NMC’s administrators and international partners, confirmed the picture presented to the market was not accurate.

Steve Smart, Joint Executive Director of Enforcement and Market Oversight, said: “The concealment of NMC’s debt position and subsequent collapse has left creditors including investors out of pocket. While the administrator has sought to recover any value and distribute to creditors, the FCA has sought, through the public censure, to explain how and why investors were misled to ensure that lessons are learnt.

“We have engaged with law enforcement agencies abroad and will continue to provide any further support they may request to help combat financial crime.”

Rules and consultations

The interpretation of consumer credit legislation for Limited Permission secondary credit brokers has been reviewed by the FCA, and as a result firms that were authorised as a Full Permission credit broker firm may be eligible to become authorised as Limited Permission firm. A decision tool has been published on the FCA website to provide further information.

An FCA review has concluded that further work from boards is required to embed its Guiding Principles expectations for ESG and sustainable investment funds. It published the review ahead of its final rules and guidance on Sustainability Disclosure Requirements (SDR) and investment labels regime, and we took some soundings from industry figures on the implications.

Speeches and media

Ulrike Hotopp and Claire Whyley have been announced as new appointments to the FCA’s and Payment Systems Regulator’s (PSR) Competition Decisions Committees (CDCs). Biographies of both are available on the FCA website.