Friday, December 21, 2018 02.25AM / By UK’s Financial Conduct Authority (FCA)
The Financial Conduct Authority (FCA) has yesterday, banned Darren Lee Newton from working in the financial services sector. The FCA discovered Mr Newton used customers’ money for the purchase of the debt management firm, First Step Finance Limited. This showed a serious lack of honesty and integrity.
The FCA has decided that he is not a fit and proper person.
Mr Newton purchased First Step, through his company, from Christine Whitehurst and was the sole director between 18 October 2013 and 28 May 2014 of First Step and was a director of another debt management company, Debt Help and Advice Limited. Mr Newton funded the purchase of First Step from the accounts of First Step, with client money, rather than his own funds. He directed or allowed £322,500 to be transferred from the First Step accounts to Mrs Whitehurst. Mrs Whitehurst and her husband, Adrian, were banned by the FCA in October 2017 for dishonestly misappropriating money.
Mr Newton knew these monies from First Step should only have been used to pay customers’ creditors or to be returned to customers. He did this when First Step had a significant client money shortfall in its accounts of over £6 million.
The firm went into administration on 28 May 2014 with a shortfall of £7,156,036 from over 4,000 customers. Customers are not able to recover compensation for their losses from the Financial Services Compensation Scheme.
Mark Steward, Executive Director of Enforcement at the FCA, said:
'Mr Newton blatantly used customers’ money to fund the purchase of First Step from Christine Whitehurst. This was dishonest and showed a complete lack of integrity. First Step was meant to help people manage their debts, but Mr Newton’s actions put them one step backwards and in a worse position than before.
'He is not a fit and proper person and poses a serious risk to consumers. This is the strongest action we can take and will prevent him from operating in financial services again.'
First Step was a debt management firm offering a debt reduction services to its customers. First Step collected and held client monies before making full and final settlement offers to customers’ creditors.
After the purchase of First Step on 18 October 2013 customers were meant to be transferred to Debt Help and Advice, from that date. However, the transfer of customers did not take place. First Step continued to receive payments from existing clients until it was placed into administration in May 2014.
1. A copy of the Final Notice can be accessed on the FCA website.
2. A copy of the press notice relating to Adrian and Christine Whitehurst can be found on the FCA website.
3. Mr Newton referred the Decision Notice, dated 21 March 2018, to the Upper Tribunal on 16 April 2018. On 5 October, his reference was struck out through Mr Newton’s non-compliance with the Tribunal Procedure Rules.
4. This press release replaces the release issued on 14 November 2018, which was issued incorrectly due to an administrative error on the part of the Tribunal. The Tribunal directed that Mr Newton may make an application for the reinstatement of his Tribunal reference, provided he does so within one month (i.e. by 14 December 2018). The Tribunal received no application to reinstate the reference by 14 December, so the assessment remains struck out.
5. On 1 April 2014, consumer credit regulation transferred from the Office of Fair Trading (OFT) to the Financial Conduct Authority. On that date firms holding a consumer credit licence issued by the OFT were, on application, automatically granted interim permission to continue trading under article 56 of the Order 2013. First Step did not have a license from OFT at the date and was not granted interim permission by the FCA.
6. Debt Help and Advice did have interim permission by the FCA.
7. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
8. Consumers who need advice on managing their debts can contact the Money Advice Service, a free and impartial service set up by the government.
9. Find out more information about the FCA.