Mr Allen was the director of a specialist loan administration company and also a company offering equity release mortgage products. When Mr Allen resigned as the finance director he admitted to making unauthorised transfers from one entity to another and a subsequent internal investigation report was provided to the FCA.

The FCA found that, between March 2009 and July 2012, Mr Allen caused illegitimate transfers totalling £1 million to be made from one entity to the other, to fund running costs, without the knowledge of other directors. He over-rode the payment system safeguards (which required authorisation codes from two individuals) by instructing members of the finance team to enter their login details.  Mr Allen also fabricated an exchange of emails purportedly between himself and another director which was provided to a colleague as evidence of authorisation for one of the transactions and falsified a bank statement in order to mislead auditors and expedite the signing-off of accounts.  In doing so, he failed to act with honesty and integrity in carrying out his controlled functions pursuant to Statement of Principle 1.

Mr Allen’s conduct straddled the effective date of the new penalty regime on 6 March 2010.  Accordingly, in calculating the financial penalty, the FCA had regard to the provisions in force before and after that date.  The FCA considered that Mr Allen’s misconduct in the period of around 1 year prior to 6 March 2010 merited a financial penalty of £65,000, whereas his conduct in the period of around 2 years after that date merited a penalty of £290,042 (on the basis that this represented 40% of his income over those two years).

Accordingly, the FCA would have proposed a penalty of £355,000, reduced to £248,500 following a 30% settlement discount, had he not provided evidence that he had an annual income of less than £14,000 and capital less than £16,000. In light of this, the FCA reduced the penalty to zero on the grounds of serious financial hardship.

View FCA Final Notice, 9 June 2015