FCA Failed to Act at Company Now in Administration

Posted on Aug 09, 2022. by NTI

There is no question that the Financial Conduct Authority (FCA) is very busy. It is always issuing edicts and memos and guidance, and it is not always easy to keep up and work out what the right thing is to do - as it will almost certainly issue another set of rules the next day which will mean having to do something else to keep on the right side of it.

But surely the FCA had time to intervene at a money transfer business (now in Administration) which handled £2.5 billion of funds and which proudly held an FCA 'e-money' licence, despite the fact it had been taken over by a tyre fitter with no experience in financial services.

Apparently, you really can't fix quicker than a quick-fix tyre fitter (reference: Kwik Fit ad 1990s).

You may be thinking; come on NTI newsroom, be reasonable. The FCA couldn't be expected to act in this particular case. Didn't it creep up on them? Well, no. The Authority had opportunities to tackle the regulated business months or even years before its recent collapse into Administration. It was granted a licence more than three years before it failed. Also, third-party payments companies that worked with the business alerted the FCA about suspicious transactions at least eight months before the regulator shut it down.

The company cannot be named for legal reasons and the Administrators cannot be named for the reason we don't know who they are. However, you can be sure all of the above is taking place in Leicestershire, proud home of the disqualified director, as you know.

It's true, Leicestershire police are leading an investigation into individuals who held or transferred funds via the business, with nineteen arrested so far, the most recent in July. “All have been released under investigation or are currently on bail, awaiting charging advice,” police said. The press crept closer for another spicy quotation.

"Back, you filth. There's nothing to see here."

The company's mystery Administrators are investigating missing customer cash, but cannot get their hands on frozen funds and face other challenges, including an absence of accounting reconciliation and discrepancies in what few records there are. It is reported that many of the transactions with companies dealing with the fallen business involved show scant evidence of genuine trading activity. Some are dormant, while many purport to be crypto companies. Many of the entities have no obvious website or public presence - and some of those that do appear to be based on incomplete website templates, with missing or “placeholder” text.

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