FINAL NOTICE

1.
ACTION

1.1.
For the reasons given in this notice, the Authority hereby makes an order,
pursuant to section 56 of the Act, prohibiting Andrew Barry Hart from performing
any function in relation to any regulated activities carried on by any authorised
person, exempt person or exempt professional firm. This order takes effect from
28 September 2016.

1.2.
By a Decision Notice dated 31 July 2015, the Authority notified Mr Hart that,
having taken into account his written representations, pursuant to section 56 of
the Act, the Authority had decided to prohibit him from performing any function in
relation to any regulated activities carried on by any authorised person, exempt
person or exempt professional firm.

1.3.
Mr Hart referred the matter to the Tribunal on 26 August 2015. On 10 August
2016, Mr Hart requested that his reference be withdrawn and, on 24 August
2016, the Tribunal gave its consent to the withdrawal of Mr Hart’s reference.

2.
SUMMARY OF REASONS

2.1.
On the basis of the facts and matters described below, the Authority has
concluded that Mr Hart is not fit and proper to perform any function in relation to
any regulated activity carried on by an authorised person, exempt person or
exempt professional firm, and that he should be prohibited from doing so.

2.2.
The Authority considers that Mr Hart is not fit and proper because he lacks
integrity and competence. Mr Hart lacks integrity because, throughout the
relevant period, he took a reckless approach to managing the Firm and to
complying with regulatory requirements, as is evidenced by his actions and
omissions in recklessly:

(a)
contributing to unfair business practices carried on by WPPL and to the
Firm’s failure to comply with regulatory requirements;

(b)
failing to address WPPL’s unfair and improper business practices, of which
he was aware, and which had the effect of misleading the Firm’s
customers; and

(c)
failing to take reasonable steps to:

i.
implement policies and procedures relating to forbearance and to
creditworthiness and affordability; and

ii.
ensure
that
WPPL
had
in
place
appropriate
systems
for

communicating with customers and for ensuring compliance with
regulatory requirements relating to CPAs, and adequate record-
keeping arrangements;

despite being aware that, in relation to these matters, WPPL was not
complying, or there was a risk that WPPL would not comply, with all
applicable regulatory requirements.

2.3.
Mr Hart lacks competence because, during the relevant period, he failed to take
reasonable steps to:

(a)
implement adequate systems and controls, including appropriate policies
and procedures;

(b)
ensure that WPPL dealt adequately with customer complaints;

(c)
provide adequate oversight of, or training to, WPPL staff members; and

(d)
ensure that loan agreements entered into by WPPL complied with
applicable regulatory requirements.

2.4.
Mr Hart’s lack of competence is further demonstrated by his failure to respond
adequately to information that became available to him during the relevant period
that pointed to a need for him to provide greater oversight of, and training to,
WPPL staff members and to put in place appropriate policies and procedures,
including in relation to complaint handling.

2.5.
Mr Hart’s reckless approach to managing the Firm, and to complying with
regulatory requirements, continued after the end of the relevant period. This was
demonstrated by Mr Hart’s failure to take adequate steps to prevent WPPL from
communicating with customers in a manner that breached the terms of the VREQ.

2.6.
The impact of Mr Hart’s conduct is particularly serious because his actions
resulted in WPPL failing to comply throughout the relevant period with the
regulatory requirements and standards applicable to payday lenders. As a
consequence, WPPL’s customers were not afforded the minimum standard of
treatment they could expect in accordance with relevant legal and regulatory
requirements. His conduct had a direct impact on WPPL’s customers, in that they
were often not treated fairly, their complaints were commonly disregarded, they
had excessive sums taken out of their accounts and they were frequently misled.
These improper and aggressive practices in some cases caused financial loss to
WPPL’s customers, many of whom were already in financial difficulties, and also
risked causing customers emotional distress.

2.7.
The Authority considers that this action is necessary and proportionate, and
supports its operational objective of securing an appropriate degree of protection
for consumers.

3.
DEFINITIONS

3.1.
The definitions below are used in this Final Notice.

(a)
‘Act’ means the Financial Services and Markets Act 2000;

(b)
‘Authority’ means the Financial Conduct Authority;

(c)
‘CCA’ means the Consumer Credit Act 1974;

(d)
‘CONC’ means the Consumer Credit section of the Handbook;

(e)
‘CPA’ means continuous payment authority, an arrangement under which a
consumer consents to a business making one or more requests for
payment from the consumer’s payment account (but excluding a direct
debit). The full definition of CPA can be found in the ‘Glossary’ section of
the Handbook;

(f)
‘DISP’ means the Dispute Resolution section of the Handbook;

(g)
‘EG’ means the Authority’s Enforcement Guide;

(h)
‘FIT’ means the Fit and Proper test for Approved Persons section of the
Handbook;

(i)
‘Handbook’ means the Authority’s Handbook of rules and guidance;

(j)
‘high-cost short-term credit’ means an unsecured loan that: (i) has an
annual percentage rate of 100% or more; (ii) is repayable within a short
term; and (iii) is not an overdraft. The full definition of high-cost short-
term credit can be found in the ‘Glossary’ section of the Handbook;

(k)
‘OFT’ means the Office of Fair Trading;

(l)
‘PRIN’ means the Principles for Businesses section of the Handbook;

(m)
‘Principle 6’ means the sixth principle of PRIN, which reads ‘A firm must
pay due regard to the interests of its customers and treat them fairly’;

(n)
‘relevant period’ means the period from 1 April 2014 to 28 August 2014,
the date of the VREQ;

(o)
‘SUP’ means the Supervision section of the Handbook;

(p)
‘SYSC’ means the Senior Management Arrangements, Systems and
Controls section of the Handbook;

(q)
‘Transfer Order’ means the Financial Services and Markets Act 2000
(Regulated Activities) (Amendment) (No 2) Order 2013;

(r)
‘Tribunal’ means the Upper Tribunal (Tax and Chancery Chamber);

(s)
‘VREQ’ means the requirements imposed upon WPPL by the Authority on
28 August 2014 following WPPL’s voluntary application for their imposition,
and which are summarised in paragraph 4.8; and

(t)
‘WPPL’ or ‘the Firm’ means Wage Payment and Payday Loans Limited.

4.
FACTS AND MATTERS

Background: regulation of the UK consumer credit sector

4.1.
Prior to 1 April 2014, the UK consumer credit sector was regulated by the OFT
under the CCA, which required firms conducting consumer credit activities,
including the provision of high-cost short-term credit such as payday loans, to be
licensed. On 1 April 2014, the Authority took over regulation of the consumer
credit sector from the OFT. An interim permission regime was introduced by the
Transfer Order for firms that held a CCA licence and intended to continue
conducting consumer credit activities after 1 April 2014 but were not authorised
by the Authority. Under this regime, firms were granted an interim permission
under Part 4A of the Act to carry on consumer credit activities.

4.2.
Also on 1 April 2014, OFT guidance relating to consumer credit activities was
incorporated into new rules and guidance set out in the CONC section of the
Handbook. Under the interim permission regime, during the transitional period
(which ended on 30 September 2014) consumer credit firms would not be treated
as having breached a rule in CONC where they were able to demonstrate
compliance with rules that corresponded to the requirements in CONC (for
example, CCA provisions or OFT guidance). On the basis of the facts and matters
set out below, Mr Hart has failed to demonstrate such compliance by WPPL.

WPPL

4.3.
During the relevant period, WPPL was a consumer credit firm that provided
payday loans (a form of high-cost short-term credit) under the trading names
‘Payday Overdraft’, ‘Wagepayday’ and ‘Doshloans’. Companies House records
show that the Firm is ultimately owned by Mr Hart, who is also its sole director.
The Firm was issued with a Consumer Credit Licence by the OFT on 13 January
2010. It added the trading names of Doshloans.com, Paydayoverdraft.com and
Wagepayday.co.uk on 24 December 2010 and was, therefore, licensed to engage
in the licensable activities of consumer credit lending using those trading names
from that date. Between 1 April 2014 and 28 September 2016, WPPL held an
interim permission to engage in the regulated activities of consumer credit

lending, providing credit information services (excluding credit repair) and credit
broking. In February 2015 WPPL applied to the Authority for full authorisation
under Part 4A of the Act. On 28 September 2016, the Authority issued a Final
Notice to WPPL cancelling WPPL’s interim permission.

4.4.
During the relevant period, WPPL had no high street presence and customers
applied for loans via its websites. On 26 March 2014, shortly before the
transition of consumer credit regulation from the OFT to the Authority, WPPL
expanded its business by purchasing the loan book of another payday lender,
Firm A. This transaction took place following the suspension of Firm A’s
Consumer Credit Licence by the OFT. During the relevant period, the Firm
provided payday loans to former customers of Firm A as well as to its own new
customers. It also collected outstanding debts from customers of Firm A (whose
loans were assigned to WPPL as a consequence of its purchase of Firm A’s loan
book).

4.5.
Throughout the relevant period, WPPL’s staff included two individuals who had
previously been employed by Firm A. These individuals, who have since left the
Firm, were based at WPPL’s premises and conducted most of the Firm’s day-to-
day interaction with customers, including the administration of its lending and
collection activities. One of these individuals (‘A’) reported to the second
individual (‘B’), who in turn reported to Mr Hart. Mr Hart, as sole director, is, and
always has been, the only senior manager of the Firm. During the relevant
period, he generally attended WPPL’s premises only once a week, and instead
contacted staff regularly by telephone or email. On occasion, as described below,
he interacted directly with customers via email.

4.6.
During the relevant period, customers applied for loans via WPPL’s websites
(www.paydayoverdraft.com and www.doshloans.com). The customer completed
an online application form, a process which required them to provide information
including their personal details, employment status, monthly income, monthly
expenses, homeowner status, bank details and average bank account balance.
During the online application process, the customer was informed that they would
be required to submit bank statements and payslips (however, as described at
paragraph 4.19 below, on some occasions this ‘requirement’ was waived by
WPPL). Following completion of the application form, the customer received an
email either declining the application or approving it in principle. If approved, the
customer was given the option (but was not required) to upload documents such
as bank statements and payslips. The customer was then invited to log into the
relevant website to sign their loan agreement online. The signed loan agreement
was then made available for the customer to download from the relevant WPPL
website, and the funds were issued.

4.7.
Mr Hart informed the Authority that the loan book purchased by WPPL from Firm
A in March 2014 comprised 1,296 loans with a value of approximately £250,000.
In June 2014, the Firm’s turnover for that year was forecast to be £145,000.
Information from WPPL’s records indicates that at 21 August 2014 the Firm had
approximately 1,431 customers. Of these customers, approximately 90% were in
full-time employment, approximately 68% had a declared monthly income of
between £1,000 and £2,000, and approximately 86% were non-homeowners.
The average age of the Firm’s customers was 32.

4.8.
On 21 August 2014, the Authority made an unannounced visit to the Firm.
Following this, on 28 August 2014, WPPL applied for the VREQ. Under the terms
of the VREQ, WPPL was (in summary) not permitted to: (i) grant new loans or
lend additional sums pursuant to existing loan agreements; (ii) engage in
outbound debt collection; or (iii) request further CPA payments from customers

from whom the Firm had previously taken CPA payments in relation to the same
loan agreements. WPPL was also required to maintain full records of contact with
customers who had contacted the Firm about repayment and who made
arrangements to pay. As at the date of this Final Notice, WPPL’s interim
permission has been cancelled.

Mr Hart’s role and responsibilities

4.9.
Mr Hart is not an approved person, nor was he an approved person during the
relevant period. During the interim permission period following the transfer of
regulation of the consumer credit sector to the Authority, there was no
requirement for senior managers of consumer credit firms to be approved (CONC
12.1.4R). Upon application for full authorisation, such individuals will need to
become approved persons.

4.10. Consequently, Mr Hart was not within the scope of the Authority’s approved

persons regime during the relevant period. However, as sole director he retained
responsibilities for oversight of WPPL’s business, including its staff. His
competence and the manner in which he chose to run the business impacted
directly on the risks WPPL posed to consumers. In the view of the Authority, Mr
Hart’s responsibilities throughout the relevant period included:

(a)
taking reasonable steps to ensure that WPPL’s business was organised so
that it could be controlled effectively;

(b)
exercising due skill, care and diligence in managing the Firm’s business;
and

(c)
taking reasonable steps to ensure that WPPL’s business complied with
relevant regulatory requirements and standards. This included the
Principle 6 requirement on firms to pay due regard to the interests of
customers and treat them fairly.

4.11. Mr Hart acknowledged to the Authority that he had overall responsibility for

WPPL’s business. He also acknowledged that he was responsible for the Firm’s
debt collection policies and procedures, monitoring the Firm’s business, handling
customer complaints and ensuring that the Firm operated in a compliant way.

4.12. In terms of his day to day role at WPPL, Mr Hart was responsible for the

supervision of WPPL’s staff. He was also responsible for authorising the funding
of loans to customers and releasing the funds from WPPL’s bank account.
Further, during the relevant period, Mr Hart regularly communicated directly with
customers of WPPL, often in connection with issues relating to the repayment of
their loans.

Unfair treatment of customers

Creditworthiness and affordability

4.13. The Authority’s rules require lenders to assess the creditworthiness of a customer

before entering into a loan agreement with them (CONC 5.2.1R). This should
include an assessment of the affordability of the loan to the customer. The
extent and scope of the assessment may include factors such as: the type of
credit; the amount of the credit; the cost of the credit; the customer’s financial
position at the time of seeking the credit; the customer’s credit history (including
any indication that the customer is experiencing or has experienced financial
difficulties); the customer’s existing financial commitments (including any

repayments due under other loan agreements and other major outgoings known
to the lender); the customer’s future financial commitments; any future changes
in circumstances which could be reasonably expected to have a significant
financial adverse impact on the customer; and the vulnerability of the customer
(CONC 5.2.3G).

4.14. The types and sources of information a firm should use when undertaking a

creditworthiness assessment include some or all of the following, depending on
what is proportionate in the circumstances: the firm’s record of its previous
dealings with the customer; evidence of the customer’s income; evidence of the
customer’s expenditure; the customer’s credit score; a credit reference agency
report; and information provided by the customer (CONC 5.2.4G(3)).

4.15. In assessing creditworthiness, the firm should take into account more than

assessing the customer’s ability to repay the credit (CONC 5.3.1G(1)). The
assessment should include the firm taking reasonable steps to assess the
customer’s ability to meet repayment in a sustainable manner without incurring
financial difficulties or experiencing significant adverse consequences (CONC
5.3.1G(2)). ‘Sustainable’ means that the customer should be able to make
repayments on time, while meeting other reasonable commitments and without
having to borrow to meet the repayments (CONC 5.3.1G(6)(a)). Firms are
required to implement clear and effective policies and procedures to make
reasonable creditworthiness assessments (CONC 5.3.2R).

4.16. Mr Hart failed to take reasonable steps to ensure that WPPL had in place

adequate policies and procedures relating to creditworthiness and affordability.
Throughout the relevant period, the Firm had no such adequate policies or
procedures in place. Mr Hart provided the Authority with a document describing
the loan application process that he claimed was in place prior to the Authority’s
visit to WPPL on 21 August 2014. However, this document (which appeared to
have been created only a short time before being provided to the Authority) did
not include a detailed policy and/or procedure for assessing affordability. In
relation to affordability, it merely stated:

‘Affordability is calculated on the portal with information provided by the
client

(a) If affordability is £200 or less auto “decline”

(b) If affordability is above £200 we go through the verification process’.

4.17. Accordingly, the loan application process document did not evidence that

adequate creditworthiness and affordability assessments were required, and
performed, by the Firm during the relevant period.

4.18. Throughout the relevant period, WPPL staff members were not required to adhere

to a specific process when making lending decisions. As noted at paragraph 4.6,
during the online application process customers were informed of the purported
‘requirement’ to submit bank statements and payslips. Upon receiving email
confirmation that their application had been approved in principle (i.e. after WPPL
had agreed to grant the loan), customers were given the option (but were not
required) to send bank statements and payslips. However, apart from assertions
by Mr Hart and WPPL staff members that they reviewed submitted customer bank
statements, there is no other evidence to indicate that the Firm ever considered
this information when making lending decisions.

4.19. The purported ‘affordability assessments’ described by Mr Hart and the WPPL staff

members were never documented. Further, on some occasions WPPL staff
members advised customers that, contrary to information provided during the
loan application process, they were not required to provide bank statements. Mr
Hart was made aware that WPPL staff members were doing this in May 2014,
when he received an email from a customer who stated, ‘I was told to ignore all
requests for Bank statements and payslips’, yet there is no evidence that he
investigated how widespread the practice was or took any steps either to stop it
or to introduce a policy setting out the circumstances in which it would be
appropriate for WPPL staff members to undertake an affordability assessment
without requiring such information.

4.20. Due to the absence of any policies on creditworthiness and affordability, lending

decisions were made informally and subjectively. The determining factor in a
decision to lend was whether the Firm considered the customer likely to pay back
the loan, rather than whether the loan was affordable to the customer. This
assessment was often based on the relationship WPPL staff members had with
the customer, or the subjective impressions they had of the customer, in
particular whether the customer had a history of paying back loans and was
therefore considered a ‘good payer’.

4.21. In view of these practices, the Authority considers that the Firm failed adequately

to assess whether the loans it advanced were affordable to its customers. For
example, in May 2014, Customer A was approved for a loan of £100. WPPL sent
Customer A a signed agreement in respect of their loan application before asking
the customer to send a payslip and bank statement. The bank statement
subsequently provided to WPPL indicated that Customer A had: (i) recently taken
out a loan with another payday lender; (ii) made frequent payments to an online
gambling firm, a pawnbroker, and other payday lenders (these payments
amounted to approximately 54% of Customer A’s net monthly employment
income); and (iii) recently incurred a £90 bank charge in respect of a returned
direct debit. The bank statement also showed a payment to a debt management
firm. Despite these strong indicators that the customer was unable to meet
repayments in a sustainable manner, WPPL went on to advance the loan
requested by Customer A without considering affordability.

4.22. In another case, in May 2014 Customer B was approved for a loan of £150. This

customer was also sent a signed loan agreement before being asked to provide a
bank statement and payslip. Customer B then submitted a bank statement which
indicated that they had recently taken out loans totalling approximately 53% of
their net monthly employment income from five other payday lenders. The bank
statement also showed that Customer B was making payments totalling
approximately 56% of their net monthly employment income to 11 payday
lenders including WPPL. Further, payments to two debt collection companies
indicated that Customer B was in financial difficulty. Despite these indicators,
WPPL advanced the loan without considering whether it was affordable to
Customer B.

4.23. In July 2014, Customer C provided WPPL with a bank statement and payslip

(again, after they had already received their signed loan agreement). The bank
statement showed that Customer C had, during the previous month: (i) taken out
a loan with a payday lender other than WPPL; (ii) made payments to three other
payday lenders; (iii) made 52 payments, totalling approximately 97% of
Customer C’s net monthly employment income, to two online gambling
companies; and (iv) made a payment to a debt collection company. WPPL
advanced a loan of £235 to Customer C the following day. There is no evidence

to indicate that the Firm assessed the affordability of this loan in light of the
information contained in Customer C’s bank statement.

4.24. The Authority’s rules require lenders to treat customers in default or arrears

difficulties with forbearance and due consideration (CONC 7.3.4R). A lender
should pay due regard to its obligations to treat customers in default or arrears
difficulties fairly (CONC 7.3.2G), and should allow such customers reasonable
time and opportunity to repay their debt (CONC 7.3.6G). Further, a lender must
not pressurise a customer to: (i) pay a debt in a single repayment (or very few
repayments) or in unreasonably large amounts where this would have an adverse
impact on the customer’s financial circumstances; (ii) pay a debt within an
unreasonably short period of time; or (iii) raise funds to repay a debt by selling
their property, borrowing money or increasing existing borrowing (CONC
7.3.10R).

4.25. Mr Hart failed to take reasonable steps during the relevant period to ensure that

WPPL had adequate policies and procedures in place in relation to forbearance
and complied with these rules and guidance. A number of WPPL customers
appear to have struggled to repay their loans on time. For example, some
customers asked for extensions of time for repayment (also known as ‘rollovers’).
In one case, a customer asked to increase their loan amount as otherwise they
would ‘only ask [WPPL] for more later in the month’, suggesting that they were in
financial difficulty. Despite these indicators that a number of customers were
unable to afford their loans, Mr Hart took no action to put in place policies and
procedures that might prevent this problem from arising or which would enable
WPPL to respond appropriately to customers who were unable to afford their
loans.

4.26. WPPL did not maintain a record of customers who were having repayment

problems and who were in arrears or in default. Rather than showing appropriate
forbearance and giving reasonable time and opportunity for the repayment of
existing debts, WPPL’s practice was to offer such customers new loans on an
immediate basis (‘re-loans’), sometimes for higher amounts, on condition that
they clear their outstanding balances. Mr Hart was aware of this practice and, on
the following occasion, was directly involved in it:

(a)
On 1 April 2014, Customer D contacted WPPL to request an extension of
time for repayment of their £150 loan. Mr Hart replied to Customer D,
‘That’s not possible. You have 2 loan extension [sic]. Please pay off and
reapply. You are due to pay £208.55 on the 6th. Do you want an
increase?’ Customer D repaid the outstanding loan the following day and
immediately took out a new loan for a higher amount (£200). There is no
evidence to indicate that WPPL assessed the affordability of the new loan
to Customer D.

(b)
When Customer D’s new loan became due for repayment (in early May
2014), they again requested an extension of time. Mr Hart was aware of
this extension, which was granted upon payment of a fee.

(c)
Customer D requested, and was granted, further extensions of time for
repayment in May, June and July 2014. The multiple extensions requested
were indicators that Customer D had become trapped in a cycle of
borrowing. Despite these indicators, WPPL failed to consider whether
Customer D was in financial difficulties and should be shown forbearance,
as required by CONC 7.3.4R.

(d)
On 30 July 2014, Customer D contacted WPPL indicating that they had lost
their job, were in serious financial difficulties, and were extremely
distressed. It was only at this point in time, and in response to Customer
D’s request to enter into a repayment plan, that WPPL showed forbearance
by offering to freeze the balance on the account.

‘Faster payment’ charge

4.27. During the relevant period, WPPL charged customers a fee for funding loans via

the ‘Faster Payments Service’ (this was also described as a ‘same day’ charge).
Funds transferred via this service were to be made available in the recipient’s
account within a few hours. The amount of the fee ranged from £10 to £35,
depending on the size of the customer’s loan. The fee was payable to WPPL in
advance and was deducted from the total loan amount advanced to the customer,
i.e. a customer who was approved for a loan of £50 and who requested a faster
payment was charged a fee of £10 and, therefore, received £40 from the £50
loan after deduction of the fee. The interest on the loan was applied to the full
amount of £50.

4.28. During the relevant period, WPPL received a number of complaints from

customers who, having contractually agreed to pay the faster payment fee,
expected to receive funds on the same day their loans were approved but whose
loans were delayed, in some cases by several days. These delays risked causing
financial difficulties for customers who did not receive their loans when expected.
Where payment was delayed, WPPL refunded the faster payment charge only if
the customer complained. Rather than simply paying back the faster payment
fee, however, WPPL’s practice was to apply a discount to the customer’s
outstanding loan.

4.29. For example, on 28 May 2014, WPPL approved a new loan for Customer E. On 2

June 2014, Customer E, who had requested the faster payment service, asked
WPPL if the loan would be transferred that day and was told that it would be paid
‘shortly’. By 11 June 2014, Customer E, who had still not received the funds,
complained, ‘I keep paying £15 a time for it to be [the] same day and it’s always
the day after or after that. Just a waste of money’. Customer E was told that
WPPL was having ‘technical issues’ with its bank and that the loan should be
funded by the next day. Customer E then asked if they would still have to pay
the £15 faster payment fee, and was told that it would be deducted from the total
amount payable when the loan was funded. By 13 June 2014, more than two
weeks after their application had been approved by WPPL, Customer E had still
not received their loan.

4.30. Mr Hart was involved in WPPL’s practice of charging customers a faster payment

fee in circumstances where there was a delay before the loan was paid. At
12.36pm on 20 May 2014, a WPPL staff member sent Mr Hart an email asking
him to transfer four separate loan amounts to four individual customers and to
deduct a £15 faster payment fee from each loan. Mr Hart responded later that
day, ‘all tomorrow’. All four customers were then sent their money the following
day, but each had been charged the £15 for the faster payment service.

4.31. On 15 July 2014, Mr Hart received an email from a WPPL staff member stating

that the Firm should charge everyone this fee as ‘we need all we can get’, adding,
‘I’ll add discounts to everyone’s account on the back end and say sorry blah blah
system error blah blah’. The staff member went on to comment that other
customers would have to wait for their loans ‘until the 18th when we get a lot of
cash come through’. This email to Mr Hart clearly indicated that: (i) the Firm had
approved loans that it was unable to fund; (ii) the funding shortfall (or part of it)

would be addressed by charging customers for a faster payment service that the
Firm was unable to provide; and (iii) customers were going to be misled about
the reasons for the planned delays in providing the service for which they had
agreed to pay. The following day, WPPL told a complaining customer that the
payment delay was due to a technical issue. Mr Hart did not take any action
during the relevant period to investigate how widespread these unfair and
misleading practices were or to stop them.

Misleading and unfair communications with customers

4.32. The Authority’s rules require lenders to ensure that their communications with

customers are clear, fair and not misleading (CONC 3.3.1R). During the relevant
period, Mr Hart failed to take adequate steps to ensure that WPPL staff members
complied with this requirement. Emails and text messages from WPPL staff to
customers were routinely aggressive and threatening in tone, and misleading in
content. Customers whose accounts were in arrears were often pressured to
make repayments in unreasonably short periods of time, contrary to the
Authority’s rules in CONC 7.3.10(2)R.

4.33. For example, on Friday 15 August 2014, Customer F (whose account was in

arrears) received the following text messages, which the Authority considers to
be aggressive and improper, from WPPL (which was chasing repayment):

(a)
At or around 17:00 that day, Customer F was told by a WPPL staff
member, ‘Don’t worry about payment now’, and that they would soon
receive documentation explaining the next steps.

(b)
At 20:06 that evening, however, Customer F received a text message from
the same staff member stating, ‘Please take this as an official notice of
default. An email will follow on Monday and a hard copy in the post. Your
balance, with default charges and interest is £1342.45p […] We will issue
county court papers within 14 days from receipt of the hard copy default
notice. I’m sorry but the excuses became intolerable.’ This text message
was misleading, as it did not constitute an official notice of default (which
must be in the form specified by the Consumer Credit (Enforcement,
Default and Termination Notices) Regulations 1983).

(c)
Customer F responded, ‘[…] You said not to worry about payment earlier
and then you have said this. I am confused and concerned that a [£]650
loan can incur charges totalling over double?’ This response indicated that
WPPL had failed to provide Customer F with a breakdown of the sum
owed.

(d)
In subsequent text messages, the WPPL staff member commented to
Customer F, ‘6 hours to get in touch with your wife [to discuss repayment]
… come on mate I wasn’t born yesterday’, ‘[…] you have no intention of
paying and have been wasting my time’, and ‘Stop wasting my time […]
It’s 9pm there are no excuses.’

(e)
Customer F replied, ‘But you told me not to do it tonight! I am not
wasting your time. I am trying to work out what you want me to do!’

(f)
The WPPL staff member responded, ‘I told you not to pay after 5.30 when
this was supposed to be done LONG before then. I’ll speak to my boss
and sort if this is paid by NO LATER than 9am tomorrow.’

(g)
At 08:39 the next day (a Saturday), Customer F received a further text
message from WPPL stating, ‘You have 35 mins to sort this out.’

4.34. Mr Hart communicated with customers in an aggressive and improper manner

himself. For example, on 7 May 2014, he sent a bulk email to customers who
were in default. The email, which had the subject line ‘Can we help?’, stated:

‘you have failed to make payment as you had agreed.

What can I do to help?

Can we agree a new repayment plan?

If we can I will not issue a default letter to you today and start a process
that involves time and cost.

Reply yes if interested and respond to the next email that follows.’

4.35. When one customer replied ‘yes’ to Mr Hart’s email, he responded with, ‘It’s ok

saying yes but you have to pay. Please catch up your payment today yes?’ He
replied to another customer, ‘How can I believe you this time?’ A relative of a
third customer replied to Mr Hart, stating, '[the customer] is ill at present. A
payment plan would be good, wouldn’t be able to afford much a month as it
seems [the customer] has had a few of these loans, got [themselves] in trouble
which has been a factor in an overdose.’ Notwithstanding the indicators that the
customer was extremely vulnerable and in financial difficulty, rather than offering
to show forbearance, Mr Hart’s only response was, ‘What is the offer per month
please?’

4.36. On 20 May 2014, Mr Hart sent emails to a number of customers indicating that

their accounts were in default. The email began, ‘my name is Andrew and I am in
charge of the legal department’. This statement was misleading as WPPL had no
legal department during the relevant period. The email invited customers in
receipt of a default letter to contact Mr Hart to ‘find a way forward to resolve
this’. Mr Hart’s response to one customer who replied to his email was, ‘payment
today […] we have had enough’.

4.37. Mr Hart, in his role as WPPL’s sole director and senior manager, did not take any

steps to: (i) provide training to staff regarding the relevant regulatory
requirements on customer communications; (ii) supervise staff to ensure
compliance with those requirements; or (iii) monitor the Firm’s communications
with customers (telephone calls, emails and text messages) for compliance
purposes.

Consequently,
staff
members,
including
Mr
Hart,
routinely

communicated with customers in a manner that was aggressive, improper and
unfair.

Threats of legal action

4.38. During the relevant period, WPPL regularly threatened to take legal action against

customers whose loan accounts were in arrears. These threats were misleading
as at that time the Firm did not intend to commence such action. The Authority’s
view is that these threats were intended to frighten customers into making
repayments that they were potentially unable to afford, in breach of CONC
7.3.18R. Mr Hart not only failed to provide sufficient oversight and supervision of
WPPL staff to prevent this from occurring, but also contributed to this unfair
business practice by making such a threat himself.

4.39. Further, WPPL falsely told one customer that it had obtained County Court

Judgments (‘CCJs’) against them, and added the costs of the alleged legal
proceedings to their accounts. Mr Hart was made aware of this:

(a)
In June 2014, Mr Hart was copied into an e-mail sent by Customer G to
another WPPL staff member. Customer G had previously been informed
that the Firm had obtained a CCJ against them and had been charged
additional costs of £360 as a result. In fact, no CCJ had been obtained.
Customer G told the employee, copied to Mr Hart, ‘I have recently been
advised that there was never a CCJ and the additional amounts I have
paid were not requested by the court.’

(b)
In a subsequent email to that WPPL staff member, Customer G
commented, ‘The documents you sent to me as court documents were not
from a court. I have had these checked.’

(c)
The WPPL staff member replied, explaining that WPPL had commenced but
subsequently discontinued proceedings against Customer G. The staff
member also told Customer G that the charges associated with the
proceedings were ‘legitimate’, even though no CCJ had been obtained.

(d)
In a subsequent email, Customer G indicated that the court documents
they had received from the Firm appeared not to be genuine, as they were
‘not even on formal/correct colour paper’.

4.40. Mr Hart failed to take any action to address the serious issues raised by Customer

G.

Collection of excessive repayment amounts

4.41. Mr Hart failed to take reasonable steps during the relevant period to ensure that

WPPL had in place adequate systems and controls to collect correct repayment
amounts from customers. Consequently, on some occasions WPPL took
repayments in excess of the amounts that had been specifically agreed with
customers. This risked causing detriment to customers, who were left short of
funds and who may have incurred consequential losses, such as bank charges for
unauthorised overdrafts and/or unpaid direct debits.

4.42. Mr Hart also failed to take reasonable steps to ensure that the Firm treated fairly

those customers from whom it had taken incorrect payments. On receiving
complaints about this issue, WPPL staff members failed to provide immediate
refunds of the amounts taken in error and instead advised affected customers to
apply for re-loans. For example:

(a)
On 1 May 2014, Customer H was informed that WPPL had taken a
payment of £195 (which represented their outstanding loan balance) in
error, rather than the agreed instalment of £45.

(b)
Rather than offer a refund of the excess amount collected (£150), a WPPL
staff member told Customer H to apply for a re-loan in respect of the
overpayment.

(c)
When Customer H asked the staff member to credit the incorrectly debited
£150 back to their card, they were told that a refund would take up to a
week but that a re-loan for that amount could be processed in 30 minutes.

(d)
When Customer H insisted on an immediate refund, the matter was
escalated to another WPPL staff member. This staff member informed
Customer H that if the Firm were to process the refund requested, the
funds would not reach their account for at least another 10 days, but if
they applied for a new loan for £150, the funds could be transferred that
day.

(e)
Despite Customer H’s repeated requests that the incorrectly taken funds
should be refunded to their card that day, the second staff member
continued to insist that a refund would take several days and advised
Customer H to apply for a re-loan.

(f)
When Customer H eventually did apply for a re-loan, their application was
not processed.

(g)
On 6 May 2014 (five days after the excess payment had been debited
from Customer H’s card), Mr Hart was forwarded an email exchange
between Customer H and the second staff member. The staff member
asked Mr Hart to issue a £150 re-loan to Customer H ‘so he stops
complaining’. Despite receiving this email exchange, which made clear
Customer H’s experience, Mr Hart did not take any action to ensure that
the customer was treated fairly (such as expediting the refund and
offering redress for any inconvenience caused by the Firm’s error).

(h)
By 12 May 2014, Customer H had still not received the re-loan. At that
point, they were informed that the funds would be in their account on 14
May, i.e. almost two weeks after WPPL had taken the excessive, incorrect
repayment.

4.43. Further, on one occasion WPPL took a ‘repayment’ despite the fact that it had not

actually advanced a loan to the individual concerned. Eleven days after the
customer first alerted WPPL to this issue, the case was escalated to Mr Hart, who
indicated that he would issue a refund the same day. He in fact failed to issue
the refund for a further six days. This meant that the individual concerned, who
had requested that the issue be dealt with immediately, had to wait 17 days to
receive a refund.

Inadequate complaint handling

4.44. The Authority’s rules require firms, including payday lenders, to implement

effective and transparent procedures for the reasonable and prompt handling of
complaints (DISP 1.3.1R). Firms are required to implement appropriate
management controls and to take reasonable steps to ensure that, in handling
complaints, they identify and remedy any recurring or systemic problems (by, for
example, analysing the causes of individual complaints to identify common root
causes and, where reasonable to do so, correcting such root causes) (DISP
1.3.3R).

4.45. Mr Hart failed to take reasonable steps to ensure that WPPL: (i) had in place

adequate policies and procedures for dealing with customer complaints; and (ii)
dealt adequately with customer complaints. During the relevant period, WPPL
had no complaint handling policy or procedures in place. It also did not maintain
a record of complaints and, therefore, had no way to monitor the number and
type of complaints received.

4.46. As a consequence, the Firm failed to:

(a)
log as complaints customer expressions of dissatisfaction with its service;

(b)
analyse the causes of complaints in order to identify common root causes;
and

(c)
deal fairly with complaints.

4.47. For example, the issues raised by Customers G and H (described at paragraphs

4.39 and 4.42 above), and of which Mr Hart was aware, were not recorded as
complaints. There was a pattern of complaints about the same issues (for
example, failure to advance loans on the same day, and misleading customers
about court proceedings), which Mr Hart and the Firm failed to identify. Further,
despite the detriment caused by the Firm’s actions in these cases, none of the
complainants were treated fairly, and none were offered redress. These
outcomes were a consequence of Mr Hart’s failure to put in place the policies,
procedures and training that were required in order to ensure that WPPL complied
with the Authority’s complaint handling rules.

Inadequate systems and controls

General absence of policies and procedures

4.48. In addition to the specific examples of a lack of policies and procedures described

at paragraphs 4.16, 4.25 and 4.45 above (relating to creditworthiness and
affordability, forbearance and complaint handling), Mr Hart failed more generally
to take reasonable steps to ensure that WPPL had in place policies and
procedures (including scripts or other guidance for telephone calls with
customers) that were appropriate to its business activities. During the relevant
period, WPPL had no written policies and procedures in place, contravening the
requirement for a firm to establish, implement and maintain adequate policies
and procedures that are sufficient to ensure its compliance (including that of its
staff) with regulatory requirements (SYSC 6.1.1R). Mr Hart should have been
especially aware of the need for written policies and procedures, in the light of
WPPL’s purchase of the loan book of another payday lender shortly before the
relevant period commenced (see paragraph 4.4). The fact that the loan book was
acquired from a firm whose licence had been suspended by the OFT, and that
WPPL’s staff included two individuals who had previously been employed at that
firm, made the risks of not doing this even more obvious.

4.49. Mr Hart provided the Authority with documents describing processes that he

claimed were in place prior to the Authority’s visit to WPPL on 21 August 2014.
However, these documents (which appeared to have been created after that visit)
were deficient in that they did not contain detailed policies and procedures that
would have enabled the Firm to comply with relevant regulatory requirements.
The documents did not, therefore, evidence that adequate policies or procedures
were in place during the relevant period. Following the visit, the Authority was
provided with a draft Compliance Manual that set out a framework of policies and
procedures relevant to WPPL’s business activities. Due to the restrictions on
WPPL’s business activities resulting from the imposition of the VREQ, this manual
was never finalised or implemented.

4.50. In response to a request from the Authority to provide details of all of WPPL’s

bank accounts covering the period from 1 April to 3 October 2014, Mr Hart
provided details of three accounts held by the Firm. However, during the relevant
period a WPPL staff member sent text messages to customers asking them to
make payments into a different account. Mr Hart informed the Authority that this
was not a WPPL bank account and that he did not know that the WPPL staff

member was making these requests. Mr Hart’s lack of awareness meant he was
not able to reconcile payments and outstanding balances for customers, putting
customers at risk. This demonstrates the seriousness of Mr Hart’s failure to take
reasonable steps to implement adequate systems and controls in respect of
WPPL’s business.

Staff oversight and training

4.51. As a consequence of the lack of policies and procedures in place at WPPL,

throughout the relevant period Mr Hart failed adequately to supervise or assess
and monitor the competence of WPPL’s staff members, or to ensure that WPPL
provided them with adequate training. In particular, there was no record of the
Firm having provided any training on the requirements set out in CONC, despite
these rules and guidance having come into force on 1 April 2014.

Use of personal mobile telephones to contact customers

4.52. Mr Hart failed to take reasonable steps to ensure that WPPL had in place

appropriate systems for communicating with customers, which would have
mitigated the risk of WPPL staff failing to comply with the relevant requirements
and standards of the regulatory system. Consequently, throughout the relevant
period, WPPL staff members regularly used their personal mobile telephones
(‘personal mobiles’) to contact customers (via calls and text messages). By
including their personal mobile numbers in their WPPL email signatures, WPPL
staff members, including Mr Hart, encouraged customers to contact them this
way.

4.53. These practices gave rise to compliance risks, as WPPL was less likely to be able

to monitor the content and frequency of such communications and, consequently,
their compliance with regulatory requirements. In fact, the Firm failed entirely to
monitor customer communications made using staff members’ personal mobiles.
Further, the retention of WPPL customers’ personal data (e.g. names and contact
details) on staff members’ personal mobiles gave rise to a risk of a breach of
customer confidentiality.

4.54. During the relevant period, Mr Hart received emails making it clear that WPPL

staff members were regularly communicating with WPPL customers by text
message and/or out of normal business hours (which was only possible through
the use of personal mobiles, as staff members had not been provided with WPPL
mobile telephones which were able to make outgoing calls or send text
messages). Despite being aware of this, Mr Hart failed to take any action to
mitigate the risks arising from these practices.

Inadequate information security arrangements

4.55. Mr Hart also failed to take reasonable steps during the relevant period to ensure

that WPPL had in place adequate security arrangements to protect confidential
and sensitive customer data held on WPPL’s IT systems. The documents provided
to the Firm by customers included scanned copies of payslips, bank statements,
identity documents (e.g. driving licences and passports) and proof of address
(e.g. utility bills). WPPL had poor systems in place to prevent unauthorised
access to this highly sensitive information. For example, the computers at
WPPL’s offices were set up to remember users’ passwords, meaning that anyone
on the premises potentially had access to customers’ personal data. Information
security breaches increase the risk of identity theft and financial crime (such as
fraud) and, therefore, have the potential to cause significant harm and distress to

individuals affected by such breaches. Mr Hart did not implement any information
security measures to mitigate this risk.

Inadequate record-keeping arrangements

4.56. The Authority’s rules require firms, including payday lenders, to keep orderly

records of their business and internal organisation, including in relation to all
services and transactions undertaken. The records kept must be sufficient to
monitor compliance with regulatory requirements (SYSC 9.1.1R).

4.57. Mr Hart failed to take reasonable steps to ensure that WPPL had in place

adequate systems to record details of the Firm’s contact with customers or recent
repayment activity, despite being aware of issues arising as a result of the
inadequate systems. Throughout the relevant period, the systems in place were
not sufficient to systematically record details of staff members’ communications
and significant discussions with customers (such as a repayment plan agreed with
a customer experiencing financial difficulties), or to enable staff, including Mr
Hart, to identify recent repayments. This gave rise to the risk that WPPL would
treat customers unfairly, for example by contacting customers with unreasonable
frequency, asking them to provide information or make repayments when they
had already done so, or acting in a manner that was not consistent with an
agreement previously reached. In fact, WPPL staff, including Mr Hart, in some
cases did contact customers to chase repayments, only to be informed that the
customer had already paid the agreed amount. For example:

(a)
On 28 June 2014, Mr Hart informed Customer I by email: “you failed to
pay on time and were £5.00 short. You now need to pay £30 in total to
get your account back from defaulting before a further £35 is charged.
Please pay today.”

(b)
Customer I replied that he had paid the amount asked for by another
WPPL staff member the previous day. This was confirmed by the WPPL
staff member.

Compliance with CPA rules

4.58. The Authority’s rules limit lenders of high-cost short-term credit to two

unsuccessful attempts to use a CPA to take a repayment and prevent such firms
from using a CPA to take part payments (CONC 7.6.12R(1)). This rule came into
force on 1 July 2014.

4.59. Mr Hart failed to take reasonable steps during the relevant period to implement

adequate systems to ensure compliance with these requirements when they came
into force. Mr Hart was aware that WPPL’s systems did not prevent WPPL staff
members from making multiple, manual CPA attempts and did not record the
number of CPA attempts made or the individual collection amounts attempted
(the systems in place recorded only the total amount collected per account), yet
he did not take any action to address this. These system limitations gave rise to
a risk of customer detriment, as they severely restricted WPPL’s ability to: (i)
monitor compliance with regulatory requirements relating to CPAs; and (ii)
identify breaches of those requirements.

Non-compliant loan agreements

4.60. Mr Hart also failed to take reasonable steps during the relevant period to ensure

that the loan agreements that WPPL entered into with customers complied with
applicable regulatory requirements. In particular, the form of agreement used by

WPPL misstated key terms such as the rate of interest charged and the term of
the loan. For example, the interest rate was variously described as 30% or
300%. The Consumer Credit (Agreements) Regulations 2010 (made pursuant to
CCA section 60) require such information to be provided in loan agreements. Any
agreement containing such errors is unclear and potentially misleading. Further,
any agreement that misstates these key terms fails to comply with the statutory
requirements relating to loan agreements, is improperly executed and,
consequently, is not enforceable without a court order (pursuant to CCA section
65). The information contained in the form of loan agreement used by WPPL was
also presented in an unclear and confusing manner. For example, the loan
agreement appeared to set out a number of incomplete examples for the
calculation of the APR, but did not clearly explain how the APR was calculated in
relation to the loan in question.

Breach of the VREQ

4.61. The requirements imposed by the VREQ on WPPL included that, from 28 August

“1.9 WPPL shall not engage in any outbound collection of any debts due to
it under regulated agreements aside from that permitted by paragraph 1.9
below [Note: this is an error and should read 1.11] (including but not
limited to outbound collection calls, postal communications, electronic
communications and SMS messaging).

1.11 For customers who contact WPPL about repayment of monies owed
and to make an arrangement to pay, WPPL will maintain full records of the
correspondence (be it letter, email, text message or telephone recording),
which will be made available to the FCA on a regular basis with a summary
of arrangements made.”

4.62. On 3 March 2015, Mr Hart on behalf of WPPL supplied the Authority with e-mail

correspondence which included:

(a)
Emails sent by WPPL to three customers in September 2014, copied to Mr
Hart, which stated: “We could not collect payment for your loan today on
your nominated pay date. Current total to repay is [£x]. To avoid your
account falling into arrears please get in touch with our office ASAP … we
would be more than happy to discuss your options with you.” ; and

(b)
Emails sent by WPPL to two customers in October 2014, copied to Mr Hart,
which stated: “Your loan is due on the [date]. Please advise if you wish to
repay the full amount or extend the loan.”

4.63. In the Authority’s view, by either seeking repayment of a loan or reminding

customers that, under the terms of a loan agreement, their loans were due to be
repaid, WPPL engaged in outbound collection of debts due to it under regulated
agreements and therefore acted in breach of clause 1.9 of the VREQ.

4.64. Mr Hart signed the VREQ on behalf of WPPL and was responsible for ensuring that

WPPL did not breach the terms of the VREQ. The emails sent to WPPL’s
customers demonstrate that Mr Hart failed to take adequate steps to prevent
communications between WPPL and customers in a manner that breached the
terms of the VREQ.

5.
FAILINGS

5.1.
The statutory and regulatory provisions relevant to this Final Notice are referred
to in Annex A.

5.2.
For the reasons given below, the Authority considers that Mr Hart is not a fit and
proper person as a consequence of his lack of integrity and competence.

5.3.
In assessing Mr Hart’s fitness and propriety, the Authority has had regard to FIT
and other relevant regulatory provisions. The Authority’s considerations in
assessing a person’s fitness and propriety include that person’s honesty and
integrity and their competence and capability.

5.4.
Mr Hart’s conduct demonstrates a lack of integrity because, throughout the
relevant period, he took a reckless approach to managing the Firm and to
complying with regulatory requirements. This is evidenced by his actions and
omissions in recklessly:

(a)
contributing to:

i.
WPPL’s unfair business practices relating to faster payment
charges, misleading and threatening communications to customers
and misleading threats of legal action; and

ii.
WPPL’s failure to comply with regulatory requirements relating to
forbearance;

(b)
failing to address, and turning a blind eye to, WPPL’s unfair business
practices relating to faster payment charges, misleading and threatening
communications to customers, misleading threats of legal action, and the
collection of excessive repayment amounts from customers. Mr Hart was
aware of these practices, which had the effect of misleading and
intimidating the Firm’s customers; and

(c)
failing to take reasonable steps to:

i.
implement policies and procedures relating to forbearance and to
creditworthiness and affordability; and

ii.
ensure
that
WPPL
had
in
place
appropriate
systems
for

communicating with customers and for ensuring compliance with
regulatory requirements relating to CPAs, and adequate record-
keeping arrangements;

despite being aware that, in relation to these matters, WPPL was not
complying, or there was a risk that WPPL would not comply, with all
applicable regulatory requirements.

5.5.
Mr Hart’s reckless approach to managing the firm, and to complying with
regulatory requirements, continued after the end of the relevant period. This is
demonstrated by Mr Hart’s failure to take adequate steps to prevent WPPL from
communicating with customers in a manner that breached the terms of the VREQ.

5.6.
Mr Hart’s conduct demonstrates a serious lack of competence because, during the
relevant period, he failed to take reasonable steps to:

(a)
implement any policies and procedures appropriate to WPPL’s business
activities, including in relation to complaint handling;

(b)
ensure that WPPL dealt adequately with customer complaints;

(c)
provide adequate oversight of, or training to, WPPL staff members;

(d)
implement adequate systems relating to information security; and

(e)
ensure that the loan agreements entered into with customers by WPPL
complied with applicable regulatory requirements.

5.7.
Mr Hart’s lack of competence is further demonstrated by his failure to respond
adequately to information that became available to him during the relevant period
that pointed to a need for him to provide greater oversight of, and training to,
WPPL staff members and to put in place appropriate policies and procedures,
including in relation to complaint handling.

6.
SANCTION

6.1.
Under section 56 of the Act, the Authority may make a prohibition order if it
appears to it that an individual is not a fit and proper person to perform functions
in relation to a regulated activity carried on by an authorised person, a person
who is an exempt person in relation to that activity or a person to whom, as a
result of Part 20 of the Act, the general prohibition does not apply in relation to
that activity. Guidance in FIT sets out the criteria for assessing fitness and
propriety. The criteria include the person’s competence and integrity.

6.2.
Mr Hart is not an approved person, and was not an approved person during the
relevant period. The Authority can, however, prohibit individuals, even if they are
not approved. Given all the circumstances, and noting that Mr Hart is not an
approved person, the Authority considers that it is appropriate to impose a full
prohibition order in accordance with the Authority’s policy set out in EG 9.1.1 and
in light of EG 9.5.1 and 9.5.2.

6.3.
This sanction supports the Authority’s operational objective of securing an
appropriate degree of protection for consumers. The Authority’s effective use of
its power under section 56 of the Act to prohibit individuals who are not fit and
proper from carrying out functions in relation to regulated activities helps the
Authority to achieve its statutory objectives.

6.4.
Mr Hart has demonstrated a lack of integrity and competence in his conduct in
relation to the regulated activities carried on by WPPL, for the reasons given
above. For those reasons, he is not fit and proper and so the Authority hereby
makes an order, pursuant to section 56 of the Act, prohibiting him from carrying
out any function in relation to any regulated activities carried on by any
authorised person, exempt person or exempt professional firm. This order takes
effect from 28 September 2016.

7.
REPRESENTATIONS

7.1.
Annex B contains a brief summary of the key representations made by Mr Hart
and how they have been considered and dealt with. In making the decision which
gave rise to the obligation to give this Final Notice, the Authority has taken into
account all of the representations made by Mr Hart, whether or not set out in
Annex B.

8.
PROCEDURAL MATTERS

Decision maker

8.1.
The decision which gave rise to the obligation to give this Final Notice was made
by the Regulatory Decisions Committee.

8.2.
This Final Notice is given under, and in accordance with, section 390 of the Act.

8.3.
Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of
information about the matter to which this notice relates. Under those
provisions, the Authority must publish such information about the matter to which
this notice relates as the Authority considers appropriate. The information may
be published in such manner as the Authority considers appropriate. However,
the Authority may not publish information if such publication would, in the opinion
of the Authority, be unfair to Mr Hart or prejudicial to the interests of consumers
or detrimental to the stability of the UK financial system.

8.4.
The Authority intends to publish such information about the matter to which this
Final Notice relates as it considers appropriate.

Authority contacts

8.5.
For more information concerning this matter generally, contact Matthew Hendin
(direct line: 020 7066 0236) of the Enforcement and Market Oversight Division of
the Authority.

Rebecca Irving

Financial Conduct Authority, Enforcement and Market Oversight Division

ANNEX A

RELEVANT STATUTORY AND REGULATORY PROVISIONS

1.
RELEVANT STATUTORY PROVISIONS

Statutory objectives and powers of the Authority

1.1
The Authority’s statutory objectives, set out in section 1B(3) of the Act, include
the consumer protection objective.

1.2
Section 56 of the Act provides that the Authority may make an order prohibiting
an individual, whether an approved person or not, from performing a specified
function, any function falling within a specified description or any function, if it
appears to the Authority that the individual is not a fit and proper person to
perform functions in relation to a regulated activity carried on by an authorised
person, exempt person or a person to whom, as a result of Part 20 of the Act, the
general prohibition does not apply in relation to that activity. Such an order may
relate to a specified regulated activity, any regulated activity falling within a
specified description, or all regulated activities.

1.3
Under Part 4A of the Act, a firm that held a valid Consumer Credit Licence issued
by the OFT prior to 1 April 2014, is permitted to carry on its consumer credit
business on or after 1 April 2014 by means of an interim permission, issued by
the Authority pursuant to Article 56 of the Transfer Order. The Authority requires
any firm granted an interim permission to make a full application for authorisation
on or before a date notified by the Authority.

Consumer credit agreements

1.4
The CCA was established for consumer protection purposes, including regulating
the form and content of regulated credit agreements. Regulations made pursuant
to CCA section 60(1) prescribe the form and content of such agreements. These
are the Consumer Credit (Agreements) Regulations 2010 (the ‘2010 Agreements
Regulations’).

1.5
CCA section 65(1) states that a ‘regulated credit agreement’ that has been
‘improperly executed’ is only enforceable against the debtor on the order of a
court.

1.6
Under CCA section 61(1), a regulated credit agreement is not properly executed
unless it: (a) is in the prescribed form, contains all the prescribed terms and is
signed in the prescribed manner; (b) embodies all the terms of the agreement,
other than implied terms; and (c) when presented to the debtor for signature, is
in such a state that all its terms are readily legible.

1.7
Regulation 3(1) of the 2010 Agreements Regulations provides that regulated
credit agreements must contain all of the information set out in column 2 of
Schedule 1 to the 2010 Agreements Regulations, insofar as that information
relates to the type of agreement referred to in column 1. The information
required includes the duration of the agreement and the applicable rate of
interest.

1.8
CCA section 87(1) states that service of a notice on the debtor or hirer in
accordance with CCA section 88 (a ‘default notice’) is necessary before the

creditor or owner can become entitled, by reason of any breach by the debtor or
hirer of a regulated agreement, to: (a) terminate the agreement; (b) demand
earlier payment of any sum; (c) recover possession of any goods or land; (d)
treat any right conferred on the debtor or hirer as terminated, restricted or
deferred; or (e) enforce any security. CCA section 88(1) states that the default
notice must be in the prescribed form and specify: (a) the nature of the alleged
breach; (b) if the breach is capable of remedy, what action is required to remedy
it and the date before that action is to be taken; and (c) if the breach is not
capable of remedy, the sum (if any) required to be paid as compensation for the
breach, and the date before which it is to be paid. Regulation 2(2) of the
Consumer Credit (Enforcement, Default and Termination Notices) Regulations
1983 (made pursuant to CCA section 88) requires any notice to be given by a
creditor or owner in relation to a regulated agreement to a debtor or hirer under
CCA section 87(1) to contain: (a) a statement that the notice is served under CCA
section 87(1); (b) the information set out in paragraphs 1 to 3, 6 and 8 of
Schedule 2 to those Regulations (these relate to: the details of the agreement;
the parties to the agreement; details of the breach and the action required to
remedy, or pay compensation for, the breach; the action intended to be taken by
the creditor or owner; and information relating to any requirement under the
notice to pay a sum of money); and (c) statements in the form specified in
paragraphs 4, 5, 7, 8A and 9 to 11 of that Schedule (these relate to: the
consequences if the breach is remedied or compensation paid; the consequences
of a failure to comply with the default notice; statements concerning a hire-
purchase or conditional sale agreement relating to goods; rights to end a hire
purchase or conditional sale agreement; statements relating to the right to apply
to the courts for a time order; statements regarding the charging of post-
judgment interest; and general statements).

1.9
The term ‘regulated credit agreement’ is defined in Article 60B(3) of the Financial
Services and Markets Act 2000 (Regulated Activities) Order 2001 (‘RAO’). Under
RAO Article 60B(3), the definition of a ‘credit agreement’ includes an agreement
between an individual (‘A’) and any other person (‘B’) under which B provides A
with credit of any amount. A ‘regulated credit agreement’ is any ‘credit
agreement’ which is not exempt.

1.10
RAO Article 36A(1) gives a list of credit broking activities governed by Part 4A of
the Act. These include: (d) presenting or offering an agreement which would, if
entered into, be a regulated credit agreement; (e) undertaking preparatory work
in order to assist an individual to enter into a regulated credit agreement; and (f)
entering into a regulated credit agreement on behalf of a lender.

2.
RELEVANT REGULATORY PROVISIONS

The Fit and Proper Test for Approved Persons

2.1
The purpose of FIT is to outline the main criteria for assessing the fitness and
propriety of a candidate for a controlled function. FIT is also relevant in assessing
the fitness and propriety of an individual who is not an approved person.

2.2
FIT 1.3.1G provides that the Authority will have regard to a number of factors
when assessing the fitness and propriety of a person. The most important
considerations will be the person’s (i) honesty, integrity and reputation, (ii)
competence and capability, and (iii) financial soundness.

2.3
In determining a person’s honesty, integrity and reputation, FIT 2.1.1G provides
that the Authority will have regard to all relevant matters including, but not
limited to, those set out in FIT 2.1.3G. FIT 2.1.3G includes whether the person

demonstrates a readiness and willingness to comply with the requirements and
standards of the regulatory system and with other legal, regulatory and
professional requirements and standards (FIT 2.1.3G(13)).

The Authority’s policy for exercising its power to make a prohibition
order

2.4
The Authority’s policy in relation to prohibition orders is set out in EG chapter 9.

2.5
EG 9.1.1 provides that the Authority’s power under section 56 of the Act to
prohibit individuals who are not fit and proper from carrying out controlled
functions in relation to regulated activities helps the Authority to work towards
achieving its operational objectives. The Authority may exercise this power to
make a prohibition order where it considers that, to achieve any of those
objectives, it is appropriate either to prevent an individual from performing any
functions in relation to regulated activities, or to restrict the functions which he
may perform.

2.6
EG 9.2.2 sets out the general scope of the Authority’s powers in respect of
prohibition orders, which include the power to make a range of prohibition orders
depending on the circumstances of each case and the range of regulated
activities to which the individual’s lack of fitness and propriety is relevant.

2.7
EG 9.5.1 to 9.5.2 provide guidance on the Authority’s exercise of its power to
make a prohibition order against an individual who is not an approved person.
The Authority will consider the severity of the risk posed by the individual and
may prohibit the individual where it considers this is appropriate to achieve one
or more of its statutory objectives.

2.8
When considering whether to exercise its power to make a prohibition order
against such an individual, the Authority will consider all the relevant
circumstances of the case. These may include, but are not limited to, the factors
set out in EG 9.3.2.

2.9
EG 9.3.2 states that, when deciding whether to make a prohibition order against
an approved person and/or withdraw his approval, the Authority will consider all
the relevant circumstances of the case which may include, but are not limited to,
the following factors:

(a)
Whether, and to what extent, the approved person has (b) been knowingly
concerned in a contravention by the relevant firm of a requirement
imposed on the firm by or under the Act (including the Principles and other
rules) or failed to comply with any directly applicable Community
regulation made under MiFID or any directly applicable provision of the
auction regulation (EG 9.3.2(3)(b);

(b)
the relevance and materiality of any matters indicating unfitness (EG
9.3.2(5));

(c)
the length of time since the occurrence of any matters indicating unfitness
(EG 9.3.2(6));

(d)
the severity of the risk which the individual poses to consumers and to
confidence in the financial system (EG 9.3.2(8)); and

(e)
the previous disciplinary record and general compliance history of the
individual including whether the Authority, any previous regulator,

designated professional body or other domestic or international
regulator has previously imposed a disciplinary sanction on the individual
(EG 9.3.2(9)).

The Principles for Businesses

2.10
PRIN sets out the fundamental obligations to which a firm must adhere. PRIN
2.1.1R lists 11 principles that a firm should follow in their role as a regulated
business (the ‘Principles for Businesses’).

2.11
The Principles for Businesses apply to regulated firms. A ‘regulated firm’ includes
any firm that: enters into a regulated credit agreement as lender; or exercises (or
has the right to exercise) the lender’s rights and duties under a regulated credit
agreement.

2.12
Principle 6 (customers' interests) requires that a firm should treat its customers
fairly and give sufficient regard to their interests.

SYSC: Senior Management Arrangements, Systems and Controls

2.13
SYSC is designed to ensure that firms’ directors and senior managers take
practical responsibility for their firms’ arrangements that are likely to be of
interest to the appropriate regulator. This means a firm must take reasonable
care to organise and control its affairs in an effective and responsible manner;
and to give responsibility of effective and responsible organisation to specific
directors and senior managers.

2.14
SYSC 6.1.1R stipulates that firms must establish, implement and maintain
adequate policies and procedures sufficient to ensure compliance of the firm,
including its managers, employees and appointed representatives (or where
applicable, tied agents). This is to ensure firms meet their obligations under the
regulatory system and counter the risk that they might be used to further
financial crime.

2.15
SYSC 9.1.1R requires that a firm must arrange for orderly records to be kept of
its business and internal organisation, including all services and transactions
undertaken by it. These records must be sufficient for the regulator to monitor
the firm’s activities and, in particular, for the regulator to ascertain whether or
not the firm has complied with all its obligations in respect of its customers.

CONC: Consumer Credit sourcebook

2.16
CONC is the specialist sourcebook for credit-related regulated activities, including:
entering into a regulated credit agreement as lender; exercising, or having the
right to exercise, the lender’s rights and duties under a regulated credit
agreement; and debt collecting (CONC 1.2.1R). The purpose of CONC is to set
out the obligations to which firms carrying out these activities are expected to
adhere. A firm is required to ensure that its employees and agents comply with
CONC (CONC 1.2.2R(1)). This is in addition to the requirements that a firm is
already required to follow under PRIN and SYSC. The rules in CONC came into
force on 1 April 2014.

2.17
CONC 3.3.1R deals with communications with consumers and financial
promotions and states the broad rule that a firm must ensure that a
communication or a financial promotion is clear, fair and not misleading.

2.18
CONC 5.2.1R addresses creditworthiness assessments made before an agreement
is entered into. It stipulates that a firm must make an assessment of the
customer’s creditworthiness before making a regulated credit agreement (CONC
5.2.1R (1)).1 The assessment made by the firm needs to consider how the
commitments of the agreement may adversely impact the customer’s financial
situation, taking into account any information the firm is aware of when the
agreement is made. The firm must also consider the customer’s ability to make
the necessary repayments when due; or, within a reasonable period if it is an
open-end
agreement
(CONC
5.2.1R
(2)(a)-(b)).2

The
assessment
of

creditworthiness must be based on sufficient information that has been obtained,
where appropriate from the customer, and where necessary from a credit
reference agency (CONC 5.2.1R (3)(a)-(b)).3

2.19
The rules set out in CONC 5.2.1R(4) set out the agreements where the above
rules on creditworthiness assessments do not apply. These include: (a) an
agreement secured on land; or (b) an agreement under which a person takes an
article in pawn.4

2.20
The rules also do not apply to: (a) a non-commercial agreement; (b) a borrower-
lender agreement enabling the borrower to overdraw on a current account; or (c)
a small borrower-lender-supplier agreement for restricted-use credit (CONC
5.2.1R(5)).5

2.21
CONC 5.2.1R(6) stipulates that the agreements referred to in CONC 5.2.1R(5),
and therefore to which this rule do apply are: (a) a borrower-lender agreement
enabling the borrower to overdraw on a current account which is an authorised
business
overdraft
agreement
or
an
authorised
non-business
overdraft

agreement; and (b) a borrower-lender agreement enabling the borrower to
overdraw on a current account which would be an authorised non-business
overdraft agreement but for the fact that the credit is not repayable on demand
or within three months.6

2.22
CONC 5.2.3G states that the extent and scope of the creditworthiness assessment
of an individual by a firm should be dependent upon and proportionate to one or
more of: (1) the type of credit; (2) the amount of credit; (3) the cost of the
credit; (4) the financial position of the customer at the time of seeking credit; (5)
the customer’s credit history, including any indications that they may be
experiencing or may have experienced financial difficulties; (6) the customer’s
existing financial commitments, including any other credit agreements and
regular outgoings known to the firm; (7) any future financial commitments of the
customer; (8) any future changes in the customer’s circumstances which may
adversely affect them financially; and (9) any vulnerability of the customer or
limitation of the customer’s mental capacity, where this is known by or
reasonably suspected by the firm.7

2.23
CONC 5.2.4(3)G requires that a firm should consider the types and sources of
information that it uses in its required assessment of creditworthiness. The types

1 A corresponding rule is set out in CCA section 55B(1).
2 A corresponding rule is set out in sections 4.1 and 4.3 of the OFT guidance document
‘Irresponsible Lending – OFT guidance for creditors’ (‘ILG’).
3 A corresponding rule is set out in CCA section 55B(3).
4 A corresponding rule is set out in CCA section 55B(4).
5 A corresponding rule is set out in CCA section 74.
6 A corresponding rule is set out in CCA section 74(1B)-(1D)
7 A corresponding rule is set out in ILG section 4.10.

and sources of information should include some, or all, of the following
(depending on the circumstances): (a) its record of previous dealings; (b)
evidence of income; (c) evidence of expenditure; (d) a credit score; (e) a credit
reference agency report; and (f) information provided by the customer.8

2.24
CONC 5.3.1(2)G stipulates that in conducting a creditworthiness assessment,
reasonable steps should be made by the firm to assess the customer’s ability to
meet repayments of the regulated credit agreement in a manner that is
sustainable. This means that the customer should not be incurring financial
difficulties or experiencing significant adverse consequences in meeting the
repayments of the agreement.9 For the purpose of CONC, ‘sustainable’ means
that repayment under the regulated agreement can be made by the customer
without undue difficulties. In particular this should mean that: (i) the customer
should be able to make repayments on time, while meeting other reasonable
commitments; and (ii) without having to borrow to meet the repayments (CONC
5.3.1G (6)(a)(i)-(ii))).10

2.25
Clear and effective policies and procedures must be established and implemented
by the firm to insure that reasonable creditworthiness assessments are made
(CONC 5.3.2R).11

2.26
CONC 7.3.2G requires that when a firm is dealing with customers in default, or in
arrears difficulties, the firm should pay due regard to its obligations to treat such
customers fairly.12 Furthermore, firms must treat such customers with
forbearance and due consideration (CONC 7.3.4R13) and, where a customer is in
default or in arrears difficulties, the firm should allow reasonable time and
opportunity to repay the debt (CONC7.3.6G).14

2.27
Under CONC 7.3.10R, a firm must not press a customer with regard to
repayments. This means that a firm must not press a customer into paying the
debt in a single or very few repayments or in unreasonably large amounts, when
to do so would adversely impact the customer’s financial circumstances (CONC
7.3.10R(1)).15 A firm must not put pressure on the customer to repay the debt
within an unreasonably short period of time, or press them into raising funds to
repay the debt by: selling their property; borrowing money elsewhere; or
increasing existing borrowing (CONC 7.3.10R(2)-(3)).16 A firm must not threaten
to commence court action to apply pressure to a customer who is in default, or
arrears difficulties, to pay more than they can reasonably afford (CONC
7.3.18R).17

2.28
If a firm has attempted to collect any sum due for high-cost short-term credit
under a CPA (requested from a payment service provider) in connection with the

8 A corresponding rule is set out in ILG section 4.12.
9 A corresponding rule is set out in ILG sections 4.1 to 4.2
10 A corresponding rule is set out in ILG sections 4.3 to 4.4.
11 A corresponding rule is set out in ILG sections 4.18 to 4.19.
12 Corresponding rules are set out in ILG sections 7.1 and 7.12 and section 2.2 of the
OFT guidance document ‘Debt Collection Guidance’ (‘DCG’).
13 Corresponding rules are set out in ILG sections 7.1 and 7.3 to 7.4 and DCG section
2.2.
14 A corresponding rule is set out in DCG section 2.2.
15 A corresponding rule is set out in ILG sections 7.1 and 7.18.
16 Corresponding rules are set out in DCG sections 3.7(b) and (i) and ILG sections 7.1
and 7.18.
17 A corresponding rule is set out in ILG section 7.1 and 7.14.

same agreement on two previous occasions, and on those occasions the payment
request was refused, it must not request payment again (CONC 7.6.12(1)).

2.29
Under CONC 12.1.4R, SUP 10A (which establishes and marks the boundaries of
the Authority’s approved persons regime) does not apply to a firm with only an
interim permission.

DISP: Dispute Resolution: Complaints

2.30
DISP sets out detailed requirements for handling complaints, and how complaints
are to be dealt with by the respondent and the Financial Ombudsman Service.

2.31
Firms are required to establish, implement and maintain effective and transparent
procedures for the reasonable and prompt handling of complaints (DISP 1.3.1R).

2.32
For the purposes of DISP, a complaint is any oral or written expression of
dissatisfaction, whether justified or not, from, or on behalf of, a person about the
provision of (or failure to provide) a financial service, which: (a) alleges that the
complainant has suffered (or may suffer) financial loss, material distress or
material inconvenience; and (b) relates to an activity of a firm under the
jurisdiction of the Financial Ombudsman Service. By DISP 2.3.1R, a firm that:
enters into a regulated credit agreement as lender; exercises (or has the right to
exercise) a lender’s rights and duties under a regulated credit agreement; or
collects debts is under the compulsory jurisdiction of the Financial Ombudsman
Service.

2.33
When dealing with complaints that do not relate to MiFID (Markets in Financial
Instruments Directive) business, the respondent must put in place appropriate
management controls and take reasonable steps to ensure that when handling
complaints it identifies and remedies any recurring or systematic problems (DISP
1.3.3R). Examples of how this could be achieved include: (1) analysing the cause
of the complaint to identify the root cause; (2) considering whether the root
cause might also affect other processes or products in the business (including
those not directly complained about); and (3) where reasonable, correcting the
root causes of the complaint.

ANNEX B

REPRESENTATIONS

1.
Mr Hart’s representations (in italics), and the Authority’s conclusions in respect of
them, are set out below:

Unfair action by the Authority

2.
Mr Hart and WPPL are being made scapegoats for the payday loans industry.
Other payday lenders have behaved worse than WPPL but the Authority has
allowed them to make changes and then continue in business. The action taken
against Mr Hart and WPPL is unfair and disproportionate compared to that being
taken against other payday lenders.

The Authority’s Regulatory Decisions Committee decided to take the action set
out in this Final Notice based on the evidence put before it in this specific case.

In any event, the Authority does not accept that Mr Hart and WPPL are being
made scapegoats. It considers the case to be distinctive as Mr Hart was
responsible for systemic failures at WPPL which covered all aspects of lending
activities, from the time of applying for a loan to the treatment of customers in
default or financial difficulties.

Other payday lenders that have been subject to voluntary requirements have
behaved differently to WPPL, for example, by openly acknowledging and
apologising for their failures, taking steps to overhaul their systems and controls,
substantially changing their lending model, committing to paying redress to
consumers, being subject to skilled person reviews and replacing the
management that were in charge at the time of their failings.

3.
The Authority was biased and prejudiced in its investigation into Mr Hart and
WPPL. For example, the Authority ignored WPPL’s offer to write off the loan book
it purchased from Firm A.

The Authority does not consider that Mr Hart’s complaints against the Authority
undermine the evidence relied upon by it in reaching its decision (which has been
made by the Regulatory Decisions Committee, a committee of the Authority
which is independent from the Authority’s Enforcement and Market Oversight
Division). Mr Hart’s complaints about the conduct of the Authority may be
pursued by him using the Complaints Scheme established under the Financial
Services Act 2012, and the Authority does not address their substance in this
Final Notice.

4.
The Authority has shown no flexibility and provided no assistance to Mr Hart
which could have helped him to run the business compliantly.

The Authority’s view is that this representation demonstrates that Mr Hart does
not understand what is expected of a firm regulated by the Authority as it is not
the Authority’s role to provide compliance services to firms that it regulates. Mr
Hart’s repeated misunderstanding of this point in his representations adds to the
Authority’s concerns about his competence, especially given the length of time he
has been managing a consumer credit business.

5.
No account has been taken of the fact that Mr Hart did not attempt to collect the
debts that WPPL had acquired in the loan book that it bought from Firm A.

In the Authority’s view, WPPL did attempt to collect these debts by
communicating with customers of Firm A to inform them that WPPL had bought
their debt and that WPPL was legally entitled to recover it.

6.
The voluntary application for the VREQ was not signed voluntarily. Mr Hart was
led to believe this was only a temporary measure.

The Authority notes that WPPL was legally represented at the time it applied for
the VREQ, and its view is that Mr Hart was aware of the implications of the VREQ.
The Authority imposed the VREQ prior to carrying out a full review of the
evidence gathered at the unannounced visit on 21 August 2014; after carrying
out the full review it reached the conclusion that it was not appropriate to remove
the VREQ.

The Authority’s Regulatory Decisions Committee did not make the decision to
impose the VREQ, and its decision to take the action described in this Final Notice
was made independently of that decision, after considering all relevant material,
including Mr Hart’s representations.

Transitional period for interim permission regime

7.
Mr Hart believed that firms granted interim permission had six months after the
Authority took over regulation of consumer credit from the OFT (i.e. until 30
September 2014) to ensure that they met the standards that the Authority
expected of them. He considers they would have been fully compliant by that
time if the VREQ had not been imposed.

The Authority’s Policy Statement PS14/3: Detailed rules for the FCA regime for
consumer credit, published in February 2014, made it clear, at paragraphs 11.3
to 11.5, that during the transitional period (from 1 April 2014 until 30 September
2014) consumer credit firms would not be treated as having breached a rule in
CONC where they were able to demonstrate compliance with rules that
corresponded to the requirements in CONC (for example, CCA provisions or OFT
guidance). As is stated in paragraph 4.2 of this Final Notice, the Authority’s view
is that Mr Hart has failed to demonstrate such compliance by WPPL.

Cherry-picked examples of misconduct

8.
The Authority has made sweeping statements, reaching broad conclusions based
on cherry-picked instances of misconduct. For example, the occasions when the
Faster Payment Service failed to work satisfactorily, and the occasions when
WPPL collected excessive repayment amounts, were very few in comparison to
the number of loans that WPPL made.

The Authority considers that the conclusions set out in this Final Notice fairly
reflect the evidence considered by the Authority in deciding to take the action
described in the Final Notice. WPPL’s known failings were widespread and
repeated, and Mr Hart has not provided evidence that during the relevant period
he took action to address the failings or put in place any controls, policies,
procedures or training that would reduce the risk of misconduct in the future.

Creditworthiness and affordability

9.
WPPL did consider affordability before advancing a loan. WPPL staff members
knew Firm A’s clients well, there were standard checks on WPPL’s systems and in
many cases wage slips and bank statements were requested. Where bank
statements were submitted, they were checked. If no bank statements were

submitted, this does not mean that an affordability assessment was not carried
out: other checks were carried out instead. Credit checks are a better test of
affordability than bank statements, which could be misleading. WPPL would
never lend money unless they considered the loan affordable.

Apart from assertions by Mr Hart and other WPPL staff members, there is no
evidence that affordability assessments were carried out by WPPL before
advancing a loan. Lending decisions lacked objectivity and were often based on a
subjective assessment of whether the customer was considered a ‘good payer’.
The fact that WPPL advanced loans when bank statements showed evidence of
payday loans from other creditors or regular gambling payments, as was the case
for Customers A, B and C, supports the view that WPPL did not consider
affordability in the manner required by CONC. Where bank statements were not
submitted, Mr Hart did not know in any particular case what checks, if any, had
been carried out.

10.
In respect of the allegation that Mr Hart was directly involved in WPPL’s failure to
comply with regulatory requirements regarding forbearance, he asked Customer
D “Do you want an increase?” because the customer had asked for one in
telephone conversations. It did not mean the customer would get an increase.

As is described in paragraph 4.26 of this Final Notice, Customer D did take out a
new loan for a higher amount after Mr Hart had asked this question. The
customer then requested extensions of time for repayment in each of the
following three months. The Authority’s view is that, despite these indicators that
Customer D had become trapped in a cycle of borrowing, WPPL failed to consider
whether Customer D was in financial difficulties and should be shown
forbearance.

‘Faster payment’ charge

11.
Where concerns were raised in respect of a faster payment charge, the charge
was refunded and an apology was offered. In fact all faster payment charges
taken in error were refunded, whether or not the customer complained. WPPL
has decided not to use the Faster Payment Service in future.

Mr Hart has not provided any evidence that all faster payment charges taken in
error were refunded. As is demonstrated by the email of 15 July 2014, it was
WPPL’s practice to apply a discount to the customer’s outstanding loan rather
than refund a delayed faster payment charge. The fact that WPPL has decided
not to use the Faster Payment Service in future does not affect the Authority’s
conclusions in respect of Mr Hart’s failings in relation to faster payment charges
during the relevant period. It was not WPPL’s intention during the relevant period
to stop using the Faster Payment Service, as is evidenced by the fact that the
faster payment charge was mentioned in the draft Compliance Manual.

12.
In respect of the email received by Mr Hart on 15 July 2014, the proposal to
charge everyone the faster payment fee was not agreed by Mr Hart.

The Authority acknowledges that at least two of the recipients of the 15 July 2014
email received payment without being charged the faster payment fee. However,
as is stated in paragraph 4.31 of this Final Notice, the Authority’s concern is that
Mr Hart did not take any action to investigate how widespread were WPPL’s unfair
and misleading practices in respect of faster payment charges or to stop them.

Misleading and unfair communications with customers

13.
The communications with customers were not threatening, and in any case the
text messages sent to Customer F were sent outside of work hours, without the
authority of WPPL or Mr Hart, and the funds were not transferred to a WPPL bank
account.

In the Authority’s view, the evidence shows that communications from WPPL staff
to customers were routinely aggressive and threatening in tone, including the
text messages sent to Customer F. Moreover, as is mentioned in paragraph 4.34
of this Final Notice, Mr Hart communicated with customers in an aggressive and
improper manner himself. The fact that text messages were sent outside of work
hours without his authority does not mitigate his failure to take adequate steps to
ensure that WPPL staff members’ communications with customers were clear, fair
and not misleading.

Threats of legal action

14.
WPPL had previously sued customers, so it is not correct to say it had no
intention to do so. It did not have time to do so during the relevant period
because it was dealing with issues resulting from its purchase of Firm A’s loan
book. In any case, it was entitled to commence court action and it was not
unreasonable to notify customers that a failure to repay could lead to court
action.

The Authority’s view is that, even if WPPL had previously sued customers, it had
no intention to commence legal action on the occasions it threatened to do so
during the relevant period. The Authority has not seen any evidence that WPPL
considered, prior to commencing legal action, whether the customer could
reasonably afford to make the payment. Accordingly, the Authority has
concluded that WPPL acted in breach of CONC 7.3.18R, which provides that a firm
must not threaten to commence court action to apply pressure to a customer who
is in default, or arrears difficulties, to pay more than they can reasonably afford.

Inadequate complaint handling

15.
There have been no defaults, nor any complaints, since 1 April 2014, and only
one complaint since 2010.

The Authority’s view is that Mr Hart and WPPL are not able to recognise or define
a complaint, as he made it clear in his representations that he considers that
expressions of dissatisfaction which are not pursued do not constitute a
complaint. The Authority’s view is that there were many other complaints made
during the relevant period.

Inadequate systems and controls

16.
The systems and controls concerns raised by the Authority relate to the fact that
Firm A withdrew the portal which WPPL had inherited from it in advance of the
date agreed by the firms. After Firm A withdrew the portal, WPPL did not have
enough time before the Authority’s visit on 21 August 2014 to ensure its systems
were adequate.

The Authority considers that Mr Hart was aware that Firm A would withdraw the
portal within four months of WPPL’s purchase of its loan book, yet took
inadequate action to manage the risks arising from the withdrawal. The Authority
would also have expected WPPL, which had been in business for four years prior

to acquiring Firm A’s loan book, to already have in place systems and controls
which it could use in respect of the acquired loan book.

17.
WPPL’s systems and controls during the relevant period reflected the fact it was a
small business with a too informal approach. The WPPL staff during the relevant
period no longer work for WPPL and, with the assistance of a law firm and
compliance consultants, WPPL now has robust systems in place.

The Authority has not seen any evidence that WPPL has made changes to its
systems and controls. The Authority’s decision to prohibit Mr Hart is based on
serious failings that affected all aspects of WPPL’s dealings with its customers, as
a result of which the Authority considers that Mr Hart is not fit and proper to carry
out functions in relation to regulated activities.

Policies and procedures

18.
WPPL did have policies and procedures during the relevant period, but these were
not written down.

As a result of its lack of written policies and procedures, WPPL contravened the
requirement in SYSC 6.1.1R for a firm to establish, implement and maintain
adequate policies and procedures that are sufficient to ensure its compliance with
regulatory requirements. Without written policies and procedures, it is not clear
how WPPL staff would have known what policies and procedures were in place, or
how Mr Hart would have checked on WPPL staff members’ compliance with
policies and procedures.

19.
WPPL has created new policies and procedures but, due to the VREQ, has not
been able to implement them. This includes procedures relating to affordability,
forbearance, communications with customers, taking legal action, collection of
repayments, complaint handling and the use of CPAs. Mr Hart has therefore not
been given the opportunity to address the concerns raised and demonstrate that
he can fulfil his responsibilities as director of WPPL in accordance with the
Authority’s requirements.

Mr Hart did provide the Authority, after the VREQ was in place, with a draft
Compliance Manual that set out a framework of policies and procedures relevant
to WPPL’s business activities. This draft manual did not address key topics in
sufficient detail (e.g. affordability), contained a number of mistakes and
inconsistencies and some of the policies were incomplete, so the new policies and
procedures would not be adequate if implemented as drafted. The Authority
accepts that, as a result of the VREQ, Mr Hart has not had an opportunity to put
in place new policies and procedures and to address the concerns raised.
However, the Authority does not consider it appropriate to give Mr Hart this
opportunity given its concerns over his fitness and propriety outlined in this Final
Notice.

20.
WPPL’s new policies and procedures will ensure compliance so any concerns the
Authority may have had about Mr Hart’s and WPPL’s actions during the relevant
period will not arise in future.

As is mentioned above, the Authority’s view is that the draft Compliance Manual
was incomplete and inadequate. In any case, regardless of any concerns about
the quality of the draft policies and procedures themselves, Mr Hart lacks the
fitness and propriety to assess their adequacy and to implement and maintain
them.

Staff oversight and training

21.
One of WPPL’s staff members, who previously worked at Firm A, managed the
business on Mr Hart’s behalf. Mr Hart was satisfied he was competent to do so
from his interview and regular meetings with him, and from the fact that the OFT
had said there were no issues with taking him on. Mr Hart also trusted the
experience of the other WPPL staff member who had previously worked at Firm A
as the OFT had also not raised any concerns about him. Mr Hart held induction
and training sessions for WPPL staff members, including on the WPPL systems,
CONC, assessing affordability and compliance procedures. It is unfair to allege
that Mr Hart did not have oversight of them as he was constantly in touch.

It was Mr Hart’s responsibility to carry out due diligence and checks on individuals
he wished to hire to ensure their suitability and competence. The OFT had no
power to prohibit or comment on the conduct of individuals at firms licenced by it,
so could not have endorsed WPPL’s staff members, and Mr Hart should not have
relied on the lack of concerns expressed by the OFT. Mr Hart also had a
responsibility to oversee WPPL’s staff members, including checking the accuracy
of what he was told and quality-checking their work. The Authority’s view is that
he failed to do this adequately, and the fact that he generally visited WPPL’s
offices only once a week contributed to this failure. In addition, Mr Hart has not
provided any record of the training that he says he carried out, nor were any
procedures, manuals or systems put in place other than the credit check system
which WPPL used and which was provided to WPPL staff members after Firm A
withdrew its portal. The Authority’s conclusion is that no substantive training was
provided to WPPL staff members.

Use of personal mobile telephones to contact customers

22.
Personal mobile numbers were removed from WPPL staff members’ email
signatures, except for Mr Hart’s email signature as he had no direct access to
clients in day-to-day matters and needed the number for company matters.

Mr Hart is not correct to claim that personal mobile numbers were removed from
WPPL staff members’ email signatures as they were included throughout the
relevant period.

23.
Mr Hart was not aware that WPPL staff members were using personal mobiles to
communicate with customers and was not aware of the text messages sent to
customers. Some previous customers of Firm A already had the personal mobile
numbers of WPPL staff members who had previously worked at Firm A, so he
could not prevent these customers from contacting these WPPL staff members.
He did, however, ask WPPL staff members not to contact customers by text
message. Where there were text communications with customers, they were
initiated by the customer.

As is described in paragraph 4.54 of this Final Notice, Mr Hart received emails
making it clear that WPPL staff members were using their personal mobiles to
communicate with WPPL customers. The phone numbers of these personal
mobiles were different to those they used when working at Firm A. WPPL staff
members did initiate some text communications with customers, for example,
some of the text communications with Customer F described at paragraph 4.33 of
this Final Notice. The Authority’s view is that Mr Hart failed to take any action to
mitigate the risks arising from these practices.

Inadequate information security arrangements

24.
The information security arrangements were adequate. Personal data was held
securely offsite and no data was ever breached or lost.

Sensitive customer data was held on WPPL’s IT systems, and WPPL had poor
systems in place to prevent unauthorised access to this information. Mr Hart had
a duty to take reasonable steps to ensure that WPPL had in place adequate
security arrangements to protect confidential data; the fact that WPPL is not
aware of any data being lost does not demonstrate that adequate security
arrangements were in place.

Compliance with CPA rules

25.
Mr Hart was only aware of one occasion where there were multiple attempts to
use a CPA to take a repayment. That mistake was dealt with and Mr Hart
informed WPPL staff members not to adopt that practice. If WPPL’s systems had
been inadequate, this would have happened on more occasions. WPPL’s systems
no longer allow more than two unsuccessful attempts to use a CPA unless done
manually, and only Mr Hart has the log-in codes.

In the Authority’s view, Mr Hart has not demonstrated that he took any action to
address the concerns that WPPL’s systems did not prevent WPPL staff members
from making multiple, manual CPA attempts and did not record the number of
CPA attempts made or the individual collection amounts attempted. The
Authority’s conclusion that Mr Hart is not fit and proper is based on his actions
during and after the relevant period; even if WPPL’s systems have been improved
since the Authority brought the problem to Mr Hart’s attention, that does not of
itself demonstrate that Mr Hart is a fit and proper person.

Non-compliant loan agreements

26.
WPPL’s loan agreements were reviewed by a lawyer to ensure that they met the
Authority’s requirements and were compliant.

The Authority has not been provided with any evidence that a lawyer reviewed
WPPL’s loan agreements and found them satisfactory. The Authority’s view is
that WPPL’s loan agreements were not compliant, for the reasons given in
paragraph 4.60 of this Final Notice.

Breach of the VREQ

27.
In respect of WPPL’s breach of the VREQ, the emails sent to customers were
system generated and, once WPPL became aware of them, the system was
altered so that no further attempts would be made.

The Authority accepts that Mr Hart may not have intended for WPPL to breach the
VREQ, but still considers that he acted recklessly in failing to take adequate steps
to prevent the breach, despite being aware of the importance of the VREQ.

Mr Hart’s integrity

28.
Mr Hart did not act recklessly and does not lack integrity. He has not hurt any
customers or caused any customers to raise any concerns. He does not accept
that he is not fit and proper to work in the financial services sector.

The Authority has concluded that Mr Hart does lack integrity, for the reasons
given in paragraphs 5.4 to 5.5 of this Final Notice. The Authority also considers
that Mr Hart lacks competence for the reasons given in paragraphs 5.6 to 5.7 of

this Final Notice. For these reasons, the Authority considers that Mr Hart is not fit
and proper to perform any function in relation to any regulated activity carried on
by an authorised person, exempt person or exempt professional firm, and that he
should be prohibited from doing so.