The Importance of Fit and Proper Checks

Operating product sales with honesty and integrity is not only your duty to your customer but a core regulation of the FCA. The FCA mandates that firms prioritise good and fair outcomes for customers and communicate information that is clear and not misleading.
 
A recent, albeit extreme, example has demonstrated the importance of having fit and proper checks to ensure that people conducting regulated activities are of good repute. The following story also shows that there are consequences for those who act dishonestly.
 
Mr. Graham Lilley, a sole trader car dealer and authorised person, has been banned by the FCA from carrying out regulated consumer finance or insurance activities after he was convicted for fraud in 2022 and didn’t tell the FCA.
 
In 2021, Mr. Lilley assured a customer that he would sell their luxury vehicle at a specific price of £60,000. After misleading the customer about the price for which he would sell the car, he sold it for a lower price and took the customer’s money from the sale of their car. The proceeds, £54,000, were used in his business, Global Car Leasing, which was directly authorised for consumer credit.
 
Mr. Lilley continued to lie that he was still trying to sell the car, eventually providing the customer with a cheque that consequently bounced.

Obvious Breaches
He acted without honesty and integrity, which is an obvious breach of the conduct rules, which state “You must act with integrity.”
 
By not telling the FCA about the conviction, he / the firm also breached Principle 11, “A firm must deal with its regulators in an open and cooperative way and must disclose to the FCA appropriately anything relating to the firm of which that regulator would reasonably expect notice.” This was compounded as he was also dealing with the FCA on another matter at the time.
 
He was sentenced to 12 months’ imprisonment, suspended for 18 months, and received an order to undertake 100 hours of unpaid work. 

Keeping your People Fit and Proper
Unfortunately, it was probably easier for Mr. Lilley, as a sole trader, to commit this crime rather than at a larger company with proper systems and controls. And whilst the case was not directly about FCA regulated activities, the FCA is still very interested in financial and non-financial misconduct.

How ITC can help
If ITC is your principal firm, we will act as your liaison and conduit with the FCA. We can help with due diligence to ensure that only fit and proper people are conducting regulated activities for customers, and support you should you need to discipline staff for serious financial and non-financial misconduct matters. Contact ITC today to find out more.