This updated press release supersedes the press release issued by the FCA on 11 August 2015 to reflect that Mr Wilkins will not be prohibited in accordance with the Tribunal’s judgment and the additional reasons for its determination.
On 11 August 2015, the Upper Tribunal released its judgment in relation to Timothy Roberts and Andrew Wilkins of Catalyst Investment Group Limited (“Catalyst”). On 18 September 2015, the Tribunal released additional reasons for its determination. The Tribunal decided to impose a fine of £450,000 and to prohibit Mr Roberts from performing any role in regulated financial services. The Tribunal also decided to fine Mr Wilkins £50,000, but the Tribunal rejected the FCA’s allegation that Mr Wilkins is not fit and proper and therefore Mr Wilkins will not be prohibited. The Upper Tribunal has rejected the allegation that Mr Wilkins is not fit and proper on any basis alleged by the FCA, as clarified by the Upper Tribunal’s additional reasons for its determination. It remains open to Mr Roberts to appeal the Tribunal’s judgment.
In August 2013 the FCA decided to fine Mr Roberts £450,000 and impose a full prohibition on him, and to fine Mr Wilkins £100,000 and prohibit him from undertaking significant influence functions. Mr Roberts and Mr Wilkins referred the FCA’s decisions to the Tribunal, leading to the Tribunal’s judgment.
Mr Roberts was a Director and the Chief Executive of Catalyst, the UK distributor of bonds issued by ARM Asset Backed Securities SA (“ARM”), of which Mr Roberts was also a Director. Mr Wilkins was a Director of Catalyst until 23 March 2010, and like Mr Roberts, was involved in compliance issues, especially in relation to financial promotions.
ARM was a securitisation vehicle based in Luxembourg which issued bonds and used the proceeds to invest in traded life assurance policies (also known as senior life settlement policies). ARM’s Bond Programme was registered with the Irish Stock Exchange and traded on its regulated market.
ARM understood that it needed a licence to issue bonds from the Luxembourg regulator, the Commission de Surveillance du Secteur Financier (CSSF), but did not have one. ARM applied for a licence in July 2009, and in November 2009, ARM was requested by the Luxembourg regulator to cease issuing bonds until it was granted a licence.
Mr Roberts allowed Catalyst to continue promoting the bonds and collecting funds from potential investors after November 2009 in circumstances where the funds collected from potential investors were not ring fenced so that they could be paid back if ARM was refused a licence.
Mr Roberts and Mr Wilkins allowed Catalyst to provide misleading information about ARM’s licence position in a letter to IFAs in December 2009. Mr Roberts also approved a letter to investors containing misleading information about ARM’s licence position in March 2010.
The Tribunal found that Mr Roberts’ conduct demonstrated a reckless disregard for the interests of investors, and considered the degree to which Mr Roberts acted with a lack of integrity to be serious. The Tribunal also found that Mr Roberts had acted without due care, skill and diligence in approving ARM’s financial promotions which failed to disclose to investors significant information relating to ARM’s regulatory position. The Tribunal agreed with the FCA’s decision to impose a prohibition order on Mr Roberts on the grounds that he is not a fit and proper person.
The Tribunal agreed with the FCA’s decision that Mr Wilkins had acted without due care, skill and diligence. Its findings in this regard mostly reflect the misconduct admitted by Mr Wilkins during the Enforcement process. However, the Tribunal rejected the FCA’s argument that Mr Wilkins had acted recklessly and without integrity. It also rejected the FCA’s argument that Mr Wilkins lacked competence and noted that a number of steps taken by Mr Wilkins demonstrated his concern for investors and their funds. The Tribunal also noted that Mr Wilkins had relied on his compliance function, on legal advice and on Mr Roberts in the relevant period. The Tribunal referred the FCA’s decision to prohibit him from holding significant influence functions back to the FCA to reconsider whether a prohibition should be imposed on Mr Wilkins in light of the findings of the Tribunal. Given the Tribunal’s finding in the additional reasons for its determination that Mr Wilkins does not lack fitness and propriety on any basis alleged by the FCA, the FCA has decided that Mr Wilkins should not be prohibited.
The Tribunal also found that contrary to the FCA’s decision, Mr Roberts and Mr Wilkins did take reasonable steps to keep Catalyst’s compliance officer informed of ARM’s licence position prior to 24 December 2009.
The decision follows the Final Notices issued to Catalyst Investment Group Limited and Alison Moran, Catalyst’s compliance officer, in September 2013.
Notes to editors
- This press release supersedes the FCA’s previous press release dated 11 August 2015 following publication of the judgment. In particular, this press release states that the Upper Tribunal has rejected the allegation that Mr Wilkins is not fit and proper on any basis alleged by the FCA, as clarified by the Upper Tribunal’s additional reasons for its determination.
- The Tribunal decision can be found here[1].
- The Tribunal’s additional reasons for its determination can be found here[2].
- The decision notices for Timothy Roberts[3] and Andrew Wilkins[4].
- Final notices for Catalyst[5] and Alison Moran[6].
- Catalyst was the primary distributor of the ARM Capital Growth Bond and the ARM Assured Income Plan in the UK. The bonds were listed on the Irish Stock Exchange - trading was suspended in November 2010. These products are a form of ‘Traded Life Policy Investment’ (TLPI) based on life insurance policies purchased in the United States. Typically, securitisation firms purchase these policies from policy holders for a lump sum, and take on responsibility for paying the premiums. When the original policy holder dies, the firm receives the insurance payment.
- The FCA views TLPI, such as ARM bonds, as complex, high risk and unsuitable for most consumers. The FCA has recommended that these products should not be marketed or sold to the mass retail market. More information for consumers on TLPI.[7]
- The FCA has declared Catalyst to be in default. This means that the FCA takes the view that Catalyst is likely to be unable to satisfy claims made against it – further information[8].
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA). On 1 April 2014, the FCA took over responsibility for consumer credit regulation.
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA[9].