The Financial Conduct Authority (FCA) has banned the director of a debt management business for improper use of client money.
The regulator has banned Darren Newton for using client money to fund the purchase by himself of First Step Finance.
Mr Newton disputes the findings of the regulator, and has appealed to the Upper Tribunal.
The FCA suspension will not take effect until after the appeal is heard.
The regulator said Mr Newton, as a director of Debt Help and Advice Limited, acted with a “lack of honesty and integrity and, as a result, the FCA has decided that he is not a "fit and proper person”.
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.
The FCA said Mr Newton used money owned by the clients of First Step to fund the purchase of First Step. The sum involved was £322,500.
The FCA has previously banned Christine and Adrian Whitehurst, the owners of First Step who sold the business to Mr Newton.
The regulator considers Mr Newton knew these monies from First Step should only have been used to pay customers’ creditors or to be returned to customers and they were paid to Mrs Whitehurst when First Step had a significant client money shortfall in its accounts of over £6m.
The firm went into administration on 28 May 2014 with a client money shortfall of £7,156,036 from over 4,000 customers.
David.Thorpe@ft.com
