Former debt management director issued ban by FCA
A former director of First Step has been banned by the Financial Conduct Authority (FCA) for misappropriating client funds.
Darren Lee Newton has been banned by the regulator from working in any regulated activity in the financial services sector after it held that he used customers’ money for the purchase of the debt management firm, First Step Finance.
Doing so showed a “serious lack of honesty and integrity”, the FCA said, and, as a result, it has decided that he is not a fit and proper person.
Newton is disputing the FCA’s decision and has referred the matter to the upper tribunal, at which the FCA and Newton will be able to present their cases. As such, the FCA’s decision currently has no effect, pending the determination by the tribunal.
The FCA’s case is that Newton purchased First Step, through his company, from Christine Whitehurst and, between October 18 2013 and May 28 2014, he was the sole director of First Step and a director of another debt management company, Debt Help and Advice.
The FCA said Newton funded the purchase of First Step from the accounts of First Step, with client money, rather than his own funds. He directed or allowed £322,500 to be transferred from the First Step accounts to Whitehurst, it added. Whitehurst and her husband, Adrian, were banned by the FCA in October 2017 for dishonestly misappropriating money from First Step.
Newton knew the cash from First Step should only have been used to pay customers’ creditors or to be returned to customers, the FCA said, adding it was instead paid to Whitehurst when First Step had a significant client money shortfall in its accounts of over £6m.
The firm went into administration on May 28 2014 with a client money shortfall of £7.1m from over 4,000 customers.
After the purchase of First Step on 18 October 2013 customers were meant to be transferred to Debt Help and Advice, from that date. However, the transfer of customers did not take place. First Step continued to receive payments from existing clients until it was placed into administration in May 2014.
First Step was a debt management firm offering a debt reduction service to its customers. It collected and held client monies before making full and final settlement offers to customers’ creditors.