FCA has issued a Supervisory Notice to Roark Holdings Ltd varying the firm’s authorisation under the PSRs 2017 by imposing restrictions on its business due to the firm’s failure to inform the FCA of a major change in circumstances.
On 24 September 2020, an individual of the firm submitted a Change in Control Notification to the FCA stating that that individual was to be the new sole director and shareholder of Roark. No further parties were declared as proposed controllers in the notification or accompanying documents. However, WhatsApp messages indicated that the individual had previously agreed with two other individuals that each would acquire equal shareholdings in the firm. There was also evidence that one of the individuals that had not been declared as a proposed controller had made representations to a third party in January 2022, as part of a mortgage application, that he held a 33.33% shareholding in the firm. This information was withheld from the FCA when the Notification was submitted, and the firm had therefore failed to inform the regulator of a major change in circumstances.
Due to this information being withheld, the FCA was not satisfied that the first individual was a fit and proper person, as it meant that the FCA was unable to assess when it considered the Notification whether the second two individuals were fit and proper and/or were of good repute and possessing appropriate knowledge and experience to provide payment services. This created a very serious risk that the FCA would be misled.
The FCA concluded it was necessary therefore to vary Roark’s authorisation, pursuant to regulation 12(1) of the PSRs, by imposing immediate business restrictions, client funds, notifications, and record retention requirements on the firm. The FCA provided the following reasons for its decision:
- the firm no longer meets one or more of the condition under regulation 6 of the PSRs;
- the firm did not inform the FCA of a major change in circumstances which was relevant to its meeting those conditions, as required by regulation 37 of the PSRs;
- the variation is desirable in order to protect the interests of customers; and
- the FCA was significantly concerned that the firm:
- may have failed to comply with its obligations under Principle 11 of the FCA’s Principles for Businesses to deal with its regulators in an open and cooperative way, and to disclose to the FCA appropriately anything relating to the firm of which the regulator would reasonably expect notice; and
- constitutes a threat to the stability of, or trust in, a payment system should it be able to continue to provide the services it has authorisation for.