PS Mortgages Ltd and Olutola v Financial Services Authority [2006] UKFSM FSM042 (8 November 2006)

Fit and proper person – Sections 40 and 60 Financial Services and Markets
Act 2000 – Disciplinary finding by professional body and Applicant’s
omission to disclose it on application for approval – References dismissed

FINANCIAL SERVICES AND MARKETS TRIBUNAL

(1) PS MORTGAGES LIMITED
(2) STANLEY OLUTOLA

First Applicant
Second Applicant

- and -

FINANCIAL SERVICES AUTHORITY

The Authority

Tribunal: JUDGE DAVID MACKIE QC
MR P LAING
MR C H SENIOR

Sitting in public in London on 8 November 2006

Mr Stanley Olutola, in person and as a director of the First Applicant

Mr Simon Gerrish for the Authority

DECISION

1. These two references to the Tribunal are about whether the Second Applicant,
Mr Stanley Olutola is a fit and proper person to perform regulated activities
relating to mortgage and insurance. The First Applicant PS Mortgages
Limited ("PSML") is a company owned and controlled by Mr Olutola and his
wife.

Background Facts

2. The Financial Services Authority ("the Authority") refused, by Decision
Notices issued on 27^th June 2006, applications made by PSML under Sections
40 , and 60 of the Financial Services and Markets Act 2000 ('the Act') .PSML
applied first to carry on regulated activities in the mortgage and insurance field
and secondly for the approval of Mr Olutola to perform certain regulated
functions and activities. The Applications had been submitted in November

2005 (although that under Section 60 was dated 11^th July 2005). On 10^th July

2006 the Applicants referred these matters to the Tribunal. Directions were
given by the President on 19^th September and the matter was heard by us on
8^th November 2006. The Directions required the parties to serve statements of
witnesses of fact by no later than 6^th October. No statements were submitted
because the Authority called no evidence and Mr Olutola was under the
impression that the direction applied to external witnesses but not to a party.
As this was clearly a genuine misunderstanding we allowed Mr Olutola to give
evidence. Mr Olutola represented both Applicants. Mr Simon Gerrish
appeared for the Authority. At the end of the hearing we informed the parties
that these applications would be dismissed for reasons to be given in this
Decision.

Legal Background

3. The Authority has a general duty to meet the regulatory objectives set out in
Section 2 of the Act which emphasise protection of consumers. The Authority
may grant an Application only if it is satisfied that the person to whom it
relates "is a fit and proper person to perform the function to which the
Application relates". It is common ground that this requirement applies in
effect to both applications. The functions involve responsibility for advising
and arranging non-investment insurance and regulated mortgage contracts for
members of the public. The Applicant must satisfy the Authority that he is a fit
and proper person having regard to all the circumstances which include his
connections, the nature of the regulated activity which he seeks to carry on and
the need to ensure that his affairs are conducted soundly and prudently. The
Authority has guidance on the "fit and proper" test in its Handbook. The
guidance most relevant to this case is as follows:-

"(i) The most important considerations include the person's
honesty, integrity and reputation (FIT 1.3.1G).

(ii) In assessing fitness, the FSA will take account of the activities
of the firm for which the controlled function is to be performed,
the permission held by that firm and the markets within which it
operates (FIT 1.3.2G).

(Hi) If a matter comes to the FSA 's attention which suggests that the
person might not befit and proper, the FSA will take into
account how relevant and how important that matter is (FIT
1.3.4G).

(iv) In determining a person's honesty, integrity and reputation, the
matters to which the FSA will have regard include, but are not
limited to (FIT 2.1.3G):

3) whether the person has been the subject of, or
interviewed in the course of, any existing or previous
investigation or disciplinary proceedings, by the FSA,
by other regulatory authorities (including a previous
regulator), clearing houses and exchanges, professional
bodies, or government bodies or agencies;"

4) whether the person is or has been the subject of any
proceedings of a disciplinary or criminal nature, or has
been notified of any potential proceedings or of any
investigation which might lead to those proceedings;

5) whether the person has contravened any of the
requirements and standards of the regulatory system or
the equivalent standards or requirements of other
regulatory authorities (including a previous regulator),
clearing houses and exchanges, professional bodies, or
government bodies or agencies.

8) whether as a result of the removal of the relevant
licence, registration or other authority, the person has
been refused the right to carry on a trade, business or
profession requiring a licence, registration or other
authority;

9) whether the person, or any business with which the
person has been involved, has been investigated,
disciplined, censured or suspended or criticised by a
regulatory or professional body, a court or Tribunal
whether publicly or privately;

13)whether, in the past, the person has been candid and
truthful in all his dealings with any regulatory body and
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.

4. Against that background the Authority can only grant an Application if it is
satisfied that the Applicant is fit and proper. It is for the Applicant to establish
that he is fit and proper not for the Authority to show that he is not. The task
of the Tribunal is not to review the reasonableness of the Authority's decisions
but for itself to determine what action the FSA should take over the
Application. We have to ask ourselves, looking at the Applications again in
light of the evidence available, whether or not we are satisfied that that Mr
Olutola is a fit and proper person to perform the functions for which the
Applications were made.

The Facts

5. This case turns on Mr Olutola's dealings with the Association of Chartered
Certified Accountants ("ACCA"), the disclosure he made in his Applications
on PSML's behalf to the Authority and the significance of letters sent by Mr
Olutola on PSML letterhead that included the words "regulated by the
financial services authority". The facts themselves are largely agreed.

6. In September 2001 ACCA wrote to Mr Olutola, then carrying on business as
Candid Accountants, drawing attention to the fact that the firm had used the
designation "Chartered Certified" even though it had no right to do so. Mr
Olutola replied promptly on 14^th September confirming that the firm would
not use the phrase "Chartered Certified" and giving details of his student
membership of ACCA and attributing the error to a Mr Munalula. On 24t^hMay 2002 Mr Olutola wrote again to Ms Keen of ACCA referring to his
earlier letter stating "I would like to retract all the statements below, because I
do accept that they are false statements.

"1. "Please note that Munalula M S made the stamped and signed
statement". Steve did not make the said stamped and signed
statement. He has no access to the company stamp and had not
at any time worked or had access to the files.

2. "I am a student of ACCA". I had previously misled him to
believe that I am fully qualified ACCA due to my ignorance.

3. "We both have a small bookkeeping business ". He had at no
time had a bookkeeping business with me.

4. "We have however ceased to use the phrase "Chartered

Certified" until we obtain more clarification on whether
MunalulaMS is a Chartered Certified member or not and if he
is why we are not allowed to use the phrase. "

7. On 2ⁿ December 2002 the Disciplinary Committee of ACCA considered two
complaints against Mr Olutola : first that he had held himself out to be in
public practice and secondly that he had misled ACCA. The committee found
the complaints proved and ordered that Mr Olutola should be removed from
the register and pay costs of £944 and that their decision should be published
in the professional and local press referring to him by name.

8. In July 2005 Mr Olutola first prepared his Application for approval to perform
controlled functions using the Authority's Form.

"Question 5.11 of Form A [Tab 9] asks:

"In respect of activities regulated by... any other regulatory body (see
note) has the candidate ... ever-

a been refused, had revoked, restricted or terminated, any licence,

authorisation, notification, membership or other permission granted by

any such body?

b been criticised, censured, disciplined, suspended, expelled, fined, or

been the subject of any other disciplinary or intervention action by any

such body?

Mr Olutola answered "No" to these questions. The Notes to Section 5

defines "Regulatory Body" as including the designated professional

bodies. These are in turn defined by the Glossary of the Handbook as

including the ACCA.

Section 7 of Form A contains a declaration which was signed by Mr

Olutola. The declaration states:

"Knowingly or recklessly giving the FSA information, which is false or

misleading in a material particular is a criminal offence.

It should not be assumed that information is known to the FSA merely

because it is in the public domain or has previously been disclosed to

the FSA or to another regulatory body. If there is any doubt about the

relevance of the information, it should be included... I confirm that the

information in this form is accurate and complete to the best of my

knowledge and belief and that I have read the notes to this form. "

Further, the guidance notes to the form state:" Do not assume that we

know certain information merely because it is in the public domain, or

has been previously disclosed to us, or to another regulatory body. In

all the circumstances, disclosures should be full, frank and

unambiguous. If there is any doubt about the relevance of the

information it should be included. "

By letter dated 16 January 2006, the Authority requested Mr Olutola to
explain his failure to disclose the action by ACCA on Form A. On 19
January 2006 Mr Olutola responded to this request:

"I do apologise for not disclosing this matter. It was not my intention
as I do know how serious non disclosure is. I had forgotten about this
issue since it was [a] long time ago and I would not have thought of its
relevance... As a director of a company called Candid Accountants the
company employed a qualified accountant named Steve
Monalula....Steve Monalula was asked to complete an accountant's
certificate to Chelsea Building Society for one of Candid's clients.
Steve completed the certificate but at that time neither Steve Monalula
nor myself was aware that just been a qualified ACCA accountant is
not sufficient to prepare such a document... A committee was set and at
the end of the investigation I was disfellowshipped by ACCA. I am
sorry that I do not have all the facts relating to this matter as I lost all
my records due to my recent divorce. "

In written representation to the Authority's Regulatory Transactions
Committee dated 8 May 2006. Mr Olutola expanded upon his letter.

"I had originally provided full statements of the event to ACCA which
was true and consistent with my statement to the FSA. " He then
describes being threatened by Steve Monalula. "I was very frightened
and distressed over the situation that I had to sign this letter ...I signed
the letter under duress. As a result of this letter I was removed from
ACCA register and was asked to pay a fine. "

In further written submissions to the Regulatory Decisions Committee,
dated 30 May 2006, Mr Olutola explained why he had not disclosed
these matters to the Authority in the following way:

"The reason for the omission was not intentioned. I stated previously
that just as I have chosen to forget many issues that led to my divorce
as remembering them is very painful; I had chosen to forget details of
the ACCA action for the same reason. The copy of the false admission
sent to me by the FSA in its warning notice brought back the memory
of the very occasion of the night when I was forced to sign the false
admission under duress...

"At the time of replying to the FSA 's letter dated 16 January, I had not
remembered the full account of the ACCA action. I had not
remembered the false statement under duress and the content of that
letter. There were no records to aid my memory as I had lost all
records due to my divorce... "

9. Between 26^th September 2005 and 23^rd February 2006 Mr Olutola wrote seven

letters to Pankhurst Financial Services Limited and Pink Home Loans on a
letterhead which included at its foot both the FSA logo and the words
"Regulated by the Financial Services Authority ". When this was drawn to Mr
Olutola's attention by the Authority, he replied on 22ⁿ March: "We sent out
the draft letterhead to Pankhurst in order to obtain their comments on its

compliance". On 8 May 2006 Mr Olutola wrote to The Authority's
Regulatory Decisions Committee "the letterhead was in its draft stage and we
had only used the letterheads in ignorance to Pankhurst and Pink while we
are applying for authorisation from the FSA. I had discussed the compliance
of the letterhead verbally with the two representatives of the two companies.
We have not used the letter to the general public." At the time Mr Olutola
was writing on PSML's behalf on headed letterhead and he was at the same
time writing to the Authority, again on PSML's behalf but on plain paper.

Evidence of Mr Olutola

10. Mr Olutola gave evidence and was cross-examined about these matters. Mr
Olutola said that the difficulty with ACCA occurred as a result of duress
imposed on him by Mr Munalula and that the second letter had been written
by him only because he was forced to do this. It was suggested to him in
cross-examination that his account had changed over a period of time. Mr
Olutola denied this and insisted that the second letter had been prepared and
typed by Mr Munalula and he had simply signed it.

11. Mr Olutola said that as a result of what had happened with ACCA he had
made a career change and sought to blot the experience out of his mind. He
had at the same time been going through a difficult divorce. When Mr Olutola
had filled out the Application to the Authority the entire ACCA experience
had passed from his memory as he had lost all his records during the course of
the divorce proceedings. An experience with his previous employer had
discouraged him from approaching the FSA for advice, although the ACCA
matter itself had passed from his memory .He had moved on, literally, by
changing address. He had chosen to forget many matters of detail that led to
his divorce because the pain that such memories caused to him.

12. The letterhead was used as a draft and only sent to the two companies with
whom PSML had been working to apply for direct authorisation from the
Authority. The letters began by stating that PSML was applying for FSA
authorisation. PSML had been discussing and obtaining the views of these two
companies about the draft letterhead. It was put to him that the letters
themselves at no point sought the views of either company about the letterhead
but Mr Olutola insisted that that was their purpose and that he had received an
e-mail addressing the subject from one of the companies (although he no
longer had this). He emphasised that the letters had been sent to no one else.

Submissions of the parties

13. Mr Olutola says that he has made these Applications to allow this Tribunal to
take a fresher and more lenient look at his case, taking into consideration what
he describes as its peculiar nature. He does not deny the substance of what is
alleged against him but relies upon the explanations given in evidence. The
claim to be regulated by The Authority was a genuine mistake. The non-

disclosure of the ACCA matter was due to loss of memory, stress and the
absence of records. He asks for clemency.

14. The Authority submit that Mr Olutola's claim to have forgotten about the
ACCA matter is incredible and that his account of the reasons for using
letterhead on which his company claimed to be regulated by The Authority is
contradicted by what the letters themselves say. Over all they say that the
non-disclosure is very serious and cite two decisions of this Tribunal Sonaike
(Tribunal Decision Number 24) and Khungar (Tribunal Decision No. 16).
They say that the overall protective purpose of the regime which they operate
requires a cautious and demanding approach and that Mr Olutola has not
dispelled the concerns raised.

Decision of the Tribunal

15. Mr Olutola presented his case intelligently and with restraint. We have no
doubt that he bitterly regrets the events which led him into difficulty with
ACCA and caused him to mislead the Authority. Having read the material and
heard Mr Olutola give evidence and be cross-examined, we have reservations
about his account of having been forced to mislead the ACCA as a result of
duress. Similarly, we do not accept that Mr Olutola could, when making his
Application to the Authority, have forgotten all about his experience with the
ACCA which had occurred less than three years previously and would have
been burned onto the memory of most professional people. We also find it
difficult to accept that the use of notepaper which claimed that PSML was
regulated by the Authority was only for the limited purpose described by Mr
Olutola. However, we accept his evidence that the letterhead was not sent to
customers or used in any way which could have misled the public.

16. The Applicant has not satisfied us that he is a fit and proper person to carry out
any of the functions which were the subject of PSML's Applications to the
Authority. We endorse the view of the Authority about the seriousness of its
duty to protect consumers. Mr Olutola was disciplined for misleading and
stating untruths to an accountancy body. He misled the Authority about that
very matter by stating an untruth on his Application. He must have been
aware of the importance of being truthful on that form and of the
consequences which might follow if he were not. It will be rare for someone
who, in the face of clear warnings on the written form, shows a knowing or
reckless want of truth or candour when making an important Application of
this kind, to be able to satisfy The Authority that he is a fit and proper person.
It seems to us that even if we accepted the truth of everything that Mr Olutola
had to say he would still fail to satisfy us that he was a fit and proper person.
Someone yielding to pressures from a colleague to mislead a professional
body, or genuinely forgetting a serious finding of professional misconduct
within two and a half years of it being made, is unlikely to be fit and proper to
carry out the important mortgage and insurance functions on which members
of the public depend.

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	United Kingdom Financial Services and Markets Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom Financial Services and Markets Tribunals Decisions >> PS Mortgages Ltd and Olutola v Financial Services Authority [2006] UKFSM FSM042 (8 November 2006) URL: http://www.bailii.org/uk/cases/UKFSM/2006/FSM042.html Cite as: [2006] UKFSM FSM042, [2006] UKFSM FSM42



	17. It follows that these References are dismissed and that the Decisions of the Authority are upheld.

	JUDGE DAVID MACKIE QC CHAIRMAN

	FIN0012&0013/06

	9

United Kingdom Financial Services and Markets Tribunals Decisions