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What has happened?

The FCA issued a First Supervisory Notice in relation to Sentor Solutions Commercial Ltd (SSCL) in September 2021. Which could impact your regulatory permissions.

What do you need to do?

SSCL was authorised on 9 January 2020 as a limited permission credit broker with secondary broking permission. SSCL is not permitted to hold client money and it is managed by one approved person who holds the SMF29 limited scope function.

Sentor Solutions Advisory Ltd (SSAL) is connected to SSCL through a common director and owner.

The various failings and risks identified by the FCA that caused it to issue the Supervisory Notice are summarised below.

Involvement in investment activities – concerns over Texmoore Ltd and Fabcourt Developments Ltd

On 19 May 2020, the FCA issued a warning relating to investments offered by Texmoore, warning that Texmoore may be providing financial services or products in the UK without authorisation.

On 2 March 2021, it issued a warning about Fabcourt, stating that Fabcourt is not authorised by the FCA to offer, promote or sell financial products and is targeting people in the UK.

Acting without the required regulatory permissions

Information obtained by the FCA suggests that the Texmoore and Fabcourt investments are safeguarded by SSCL and SSAL acting as security trustees. Neither SSCL nor SSAL are or have been, permitted by the FCA to provide regulated investment activities which are required permissions for a security trustee. SSCL’s Financial Services Register entry shows that it has only been authorised with credit broking permission but is limited to secondary broking. This means SSCL is limited to credit broking as a supplier of goods or services carried on for the purposes of, or in connection with, the sale of goods or services to a customer.

Misleading statements to consumers

SSCL and SSAL may have misled consumers about the permitted scope of their regulated activities. Information obtained by the FCA indicates that SSCL and SSAL’s regulated status was highlighted in communications to consumers without any explanation or clarity on the specific nature of their permissions. Taken at face value, the statements may have given the impression that SSCL and SSAL have regulatory permissions to undertake regulated investment activities.

Ongoing contact with consumers

At least three consumers have contacted the FCA expressing concerns about the activities of SSCL and SSAL after the FCA warnings on Texmoore and Fabcourt were issued. SSCL and SSAL appear to have continued facilitating consumer investments in Texmoore and Fabcourt despite the FCA’s warnings on these companies.

Based on the consumer reports, the FCA considers that SSCL and its director may continue to present a significant risk to consumers. The offer of an investment redemption scheme by SSCL on behalf of Texmoore and Fabcourt indicates there are continuing risks to existing investors, even if no new investments are being sold to consumers.

Business activities

Although SSCL was authorised on 9 January 2020 as a limited permission credit broker with secondary broking permission, the FCA is unclear about the nature of its current business activities.

SSCL has not provided the FCA with any further information about its credit broking activities nor submitted its latest regulatory return that was due on 4 January 2021 for the period ended 30 November 2020, which required consumer credit data to be included.

Engagement with SSCL – misleading responses to an initial information request

Following the warnings issued on Texmoore and Fabcourt and consumer reports about the activities of SSCL and SSAL, the FCA sent an initial information request to SSCL under section 165 of the Act seeking details about SSCL’s activities and those of SSAL and their relationships and involvement with Texmoore and Fabcourt. In response, SSCL’s director stated that SSCL and SSAL had no current relationship with either Texmoore or Fabcourt but indicated that the firm had previously introduced potential investors to the companies to help them raise funds. He also stated that SSCL and SSAL do not hold any kind of security on behalf of investors. The FCA considers that the responses from SSCL’s director to be misleading because they differ from information obtained by the FCA from consumers that indicates SSCL and SSAL did not act solely as introducers to Texmoore and Fabcourt.

Further information requests to SSCL

The FCA has unsuccessfully tried to contact SSCL to obtain further information about its business activities and those of SSAL to better understand their involvement with Texmoore and Fabcourt and to ascertain whether the firms have been acting outside the scope of their permitted regulated activities.

SSCL appears to have breached the FCA’s Principles for Businesses, specifically Principle 6 (Customers’ interests) and Principle 11 (Relations with regulators). In addition, the FCA considers that SSCL is failing, or is likely to fail, to satisfy the Suitability Threshold Condition and poses a significant risk to consumers.

As a result, the following requirements have been imposed on SSCL;

1. The firm must not, without the prior written consent of the FCA, carry on any regulated activities for which it has a Part 4A permission,
2. The firm must not undertake any business relating to the promotion, offering or distribution of investments for or on behalf of Texmoore and Fabcourt Developments, and
3. The firm must ensure that its directors and employees do not engage in any promotion, offering or distribution of investments for or on behalf of Texmoore and Fabcourt Developments. SSCL must also not permit any individual to remain as a director or employee if they carry on any business through SSCL or elsewhere for, or otherwise have an interest in, these companies.

The requirements will remain in place indefinitely or until the FCA is satisfied that it is appropriate for them to be lifted.

How can we help you?

If you’d like to know more about how we can help you with your regulatory permissions, or with any other regulatory compliance issues, our expert team is here to help.

Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.