FCA uses criminal powers for first time against alleged unlicensed lender

20 January 2017

The Financial Conduct Authority (FCA) has for the first time instituted a criminal prosecution under the consumer credit powers it inherited from the Office of Fair Trading (OFT) on 1 April 2014. 

The first hearing in its case against Dharam Gopee took place at Westminster Magistrates’ Court on 17 January.   In this case, the FCA is alleging that Mr Gopee operated for many years as an unlicensed consumer credit lender, engaging in regulated activities without the appropriate authorisation from the FCA or, prior to that, the OFT.

Carrying out unauthorised business is a criminal offence contrary to sections 19 and 23 of the Financial Services and Markets Act 2000 which carries a maximum sentence of two years’ imprisonment.  However, the complexity of the relevant legislation, and the fact that a period of alleged offending may straddle more than one statutory regime, means that pursuing criminal prosecutions can be far from straight-forward.  

Now that the FCA has taken this step, it will be interesting to see if it will pursue further cases in the consumer credit space.  It may also be that this case signals a new willingness on the part of the Authority to pursue some of the many criminal offences under FSMA which are rarely if ever prosecuted.  While such proceedings may lack the prestige of the blockbuster insider dealing cases for which the Authority has become known, these offences nevertheless form a valuable part of its enforcement toolkit which should be pursued in appropriate cases.     

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