In Ollerenshaw and Reeh v the Financial Services Authority (the FSA), former directors of the Black and White Group Limited (in liquidation) (B&W), challenged decisions of the FSA in a reference to the Upper Tribunal.
B&W specialised in arranging mortgages and associated insurance, including Payment Protection Insurance (PPI), using a panel of between 20 and 25 mortgage lenders. PPI accounted for 20 to 25% of B&W’s revenue. One of B&W’s panel lenders, Money Partners, had granted B&W a significant loan facility. Following a visit of B&W in October 2005, the FSA raised concerns regarding B&W’s corporate governance practice and regulatory compliance. An FSA investigation found that B&W’s advisers were being pressurised to sell products provided by Money Partners and to sell PPI without regard to the suitability of the product. An incentive scheme where cash prizes were awarded to advisers for PPI sales was also found to be higher than that for other sales.
By Decision Notices issued to Mr Ollerenshaw and Mr Reeh in August 2010, the FSA imposed prohibition orders prohibiting both individuals from performing regulated activities on the grounds that neither was a “fit and proper person”. In addition to the prohibition orders, both individuals received a financial penalty.
Having reviewed the evidence and mitigating circumstances before him, His Honour Judge Mackie varied the Decision Notices as to penalty. A prohibition order was made against Mr Ollerenshaw but not against Mr Reeh and the financial penalty imposed on both individuals was reduced.
The case reminds regulated firms that good corporate governance and regulatory compliance remains a key target for the FSA and firms must take care to ensure that customers are treated fairly.
To view the Tribunal’s decision, please click here and to view the FSA’s press release, please click here.