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Adviser wins tribunal case against FCA

Adviser wins tribunal case against FCA

The Upper Tribunal has sided with a former HSBC financial adviser after the Financial Conduct Authority blocked him from setting up his own advice firm due to previous allegations of fraud.

The tribunal has told the FCA that Mr L has been subjected to “an unjustified accusation” and ordered the regulator to reconsider their decision to reject his application to be authorised to offer financial advice.

In 2010, Mr L , who had worked as a senior financial planning manager in HSBC’s Barking branch since 2006, had accessed confidential customer details, which were then subsequently used by a scam artist to engage in fraudulent transactions.

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This led to him being accused of engaging in fraudulent activity by “abuse of position”, an offence he was subsequently acquitted of at Southwark Crown Court in January 2012.

In 2014, Mr L made an application to the FCA to carry out regulated activities – including advice on pensions, mortgages, investment and insurance – from his financial advice firm.

However, in May 2015, the regulator refused the application, and despite Mr L’s acquittal in 2012, the FCA said it was “not satisfied” that Mr L had acted with “probity” during his time at HSBC.

Therefore, in June, Mr L, who denies any involvement in fraudulent activities, referred the FCA’s refusal to the tribunal.

At the time of the investigation, his career with HSBC was going well, but he was looking at other options in private banking and other areas of wealth management, according to court documents.

He had interviews with Barclays Wealth and Coutts, but decided to clear his name before pursuing new opportunities.

Since July 2011, Mr L worked in financial consulting on a freelance basis, and in 2013 a firm of financial consultants applied for him to be approved to perform controlled functions.

However, they withdrew the application, claiming they were unable to pass Mr L on the fitness and propriety tests, adding: “The lack of information and co-operation from HSBC was a considerable contributing factor on us not being able to evidence Mr L’s fitness and propriety”.

The investigation into Mr L began after he used his log-in information to access information on a client – referred to as Mr K – printing historic bank statements of their account.

Over the next two days, a person acting fraudulently phoned HSBC, pretending to be Mr K, and was able to alter personal details linked to that account.

Fraudulent payment instructions were then made, in amounts ranging up to £50,000, and a personal loan of £25,000 was taken out through internet banking. A similar instance involving a different client occurred days later.

Mr L accepted that information he accessed had fallen into the hands of fraudsters, but disputed if the FCA was right to conclude that he knowingly made the information available for fraudulent use.

Following cross-examination of Mr L, the tribunal found his answers “satisfactory” and said he “endeavoured to give honest testimony”.

Tribunal judge Andrew Bartlett QC said there was no direct evidence to suggest Mr L deliberately released customer information for fraudulent purposes, nor was there any connection between him and the fraudsters.