FCA take landmark action to protect the vulnerable.

Recent action from the FCA has highlighted their commitment to protect vulnerable customers. In a landmark case the regulator has issued a Serious Crime Protection Order for the first time.

In February 2015, within Occasional Paper 8 (updated September 2016), the FCA made clear its expectations on firms to manage vulnerable customers efficiently and effectively. Now following this court case, we see an equally clear demonstration from the regulator that it is prepared to play its part in protecting vulnerable customers too.

>>Click here to read our previous article on OP8

On 8th February 2018, illegal money lender, Dharam Prakash Gopee (64), was sentenced to three and a half years imprisonment by a Judge in Southwark Crown Court. This was for offences under the Consumer Credit Act 1974 and the Financial Services and Markets Act 2000.

This latest sentence follows a catalogue of legal actions against Mr Gopee, included having several of his companies wound up in the public interest following proceedings by the Official Receiver.

In June 2015 he was the subject of a restraint order obtained by the FCA under the Proceeds of Crime Act 2002. However, after repeated breaches of the restraint order he was imprisoned for 18 months.

On 5th May 2016 Gopee was banned from acting as a company director. He was disqualified for 15 years which is the maximum period allowed under the Company Directors Disqualification Act 1986.

In September 2016 he was released from prison early, having promised the court he would comply with the order. Despite his assurances he went on to commit additional breaches, resulting in a further 15 months prison sentence. His three and half year sentence for the recent offences will begin after this current term ends in June this year.

Between 2012 and 2016, Mr Gopee acted as an illegal money lender despite being refused a consumer credit licence by the Office of Fair Trading (OFT) or securing authorisation from the FCA. He loaned money to vulnerable consumers at high rates, securing the loans against their property, and then sought to take possession if they failed to pay. He continued to pressurise debtors with demands for payment, threatening court action that he knew could not be sustained, endeavouring to enforce agreements he knew were unenforceable but that debtors did not.

Over the four-year period, Mr Gopee’s loan books showed that he issued approximately £1 million of new loans and took in at least £2 million in payments from old and new consumers, none of whom were aware that did not have a licence.

In sentencing Mr Gopee, the judge noted that his business practices “exploited the weaknesses and vulnerabilities of many, many people” who were unaware that their trust in him was misplaced, showing “a horrid pattern of exploitation”.

In addition to this custodial sentence, Mr Gopee has been issued with a Serious Crime Prevention Order (SCPO), which will severely restrict his ability to carry out this type of crime in the future. This is the first time the FCA has sought such an order, which underlines the seriousness of his conduct.

The SCPO will begin on Mr Gopee’s release from custody and will last for five years. It includes conditions prohibiting him from conducting any business in the credit sphere, limits the number of bank facilities he is permitted to operate, and requires him to make disclosures of those banking facilities to the FCA. Breaching the terms of the order is a criminal offence, punishable by up to five years’ imprisonment.

Proceedings have now begun to confiscate the proceeds of Mr Gopee’s criminality.

The conduct of this individual is extreme in the least but will go a long way to underline the cause of protecting vulnerable customers.