On 28 April 2016, the FCA published a press release announcing that a director of three debt management firms (Debts Reduced Ltd, Linked Finance Ltd and a firm set up in the director’s own name) has been sentenced at Cardiff Crown Court for fraud by abuse of position.

• Read FCA press release = http://bit.ly/1XXMBoG

The court sentenced the director on 8 April 2016 to 15 months in prison, suspended for two years, and 200 hours of community service. The case was brought by South Wales Police following its own investigation, and the FCA provided co-operation and assistance.

The press release states that the FCA provided a witness statement for the prosecution setting out the actions it took having been made aware of allegations that the director had acted inappropriately:

• It was alleged that the director had charged customers £10 per month for an additional product, referred to as a cover plan. The director stated that this product provided help to customers if their circumstances changed and they were subsequently unable to make payments into their debt management plan, and therefore to creditors.
• The director was unaware of any contractual basis on which any of the customers consented to this service and was also unaware of any documentation or correspondence initially used to make customers aware they were paying into, or had access to, the service.
• At the request of the FCA, the director restricted the FCA permissions held and agreed that the firms would cease engaging in new debt management business. The restriction took effect on 21 May 2014.
• The director also agreed to the FCA’s request to wind down the firms in an orderly manner and to focus on returning monies (including those monies accumulated as part of the cover plan) back to the relevant customers.
• On 20 February 2015, having been satisfied that the director had returned all the monies to the relevant customers, the FCA cancelled the firms’ interim permissions.

The press release advises that, where the FCA becomes aware of potential criminal activity in the markets it regulates, including debt management, it will work with the relevant law enforcement agencies as well as making appropriate use of its own regulatory powers.

Debt management is a key area of focus for the FCA under its regulation and supervision of the consumer credit market.