UT-2023-000032 - [2024] UKUT 00265 (TCC)

Mr. Hancock was employed by Tenet as the Investigations and Financial Crime Manager. He held this position since April 2021. His previous job title (at the time of his investigation into Mr. Ashraf) was Investigations & Remediation Manager. However, his roles and responsibilities remained the same. Mr. Hancock left Tenet in December 2023 to take up a role with the Authority. Before joining Tenet he worked for The Royal Military Police. He had no previous experience of financial investigations, but he said that investigation approaches were the same in all cases.

On 16 July 2021 a suspicious activity report (“SAR”) was raised following the AST’s review, which identified that Mr. Ashraf had failed to evidence the source of funds and had provided advice to a client overseas. The case was reviewed in full and no specific financial crime concerns were identified. As a result, these concerns were discussed with Mr. Ashraf at an informal meeting between Ms Ford, Mr Forbes, and Mr. Ashraf. Mr. Hancock told Ms Ford that there were no financial crime issues here, but Mr. Ashraf would still have been asked for his comments in relation to Tenet policy on advising clients abroad.

Following a further meeting on 16 September 2021, Ms Ford placed Mr. Ashraf on enhanced monitoring, due to concerns relating to his file quality and his application of Tenet’s standards and policies. Part of this enhanced oversight involved additional file checks to be completed by Tenet’s AST.

On 27 September 2021, Mr. Hancock received further reports relating to Mr. Ashraf’s cases which had been checked as part of the enhanced oversight. His team had also identified concerns with Mr. Ashraf as he had conducted an electronic verification check which had resulted in a ‘fail’ outcome. Mr. Hancock explained that an electronic verification check is a process of confirming an individual’s identity utilising third party software, such as Experian or Equifax. This is a due diligence requirement in respect of financial crime and must be conducted on all parties involved in a transaction, including any associated donor. When a ‘fail’ outcome is generated via the screening software, the adviser must submit this to the Tenet financial crime team for second line due diligence prior to proceeding with any application. In this particular case the customer deposit was being gifted and the ‘giftor’ had generated a ‘fail’ outcome. Mr. Ashraf did not submit this to the financial crime team as required by Tenet’s process.

Mr. Hancock reviewed the concerns and investigated further. His exhibit MH1 sets out the detail which was provided by Tenet’s AST and formed the basis of his investigation, as well as his findings as a result of his meeting with Mr. Ashraf on 30 September 2021. We will need to review MH1 and its contents in some detail, and so we have reproduced it in the Annex to this decision.

Mr Hancock explained that, having received these four suspicious activity reports, he would start the investigation by logging into the back office system where advisers lodge documents. He would look at the fact finds, other notes and supporting documents. He could then decide whether the concerns raised were valid and this would also give him what he needed to formulate his questions for the interview.

Mr Hancock said that, to summarise the investigation, he was concerned that Mr. Ashraf was providing advice to overseas clients which was against Tenet standards. Mr. Ashraf also demonstrated in the interview that he was not exercising sufficient due diligence with his mortgage applications. It appeared that Mr. Ashraf was taking clients’ word for their income, expenditure and source of funds, and had failed to evidence the origin of these. Mr. Ashraf also demonstrated that he was unaware of the exact job roles of some of his clients, and whilst discussing the matters with Mr. Ashraf, he appeared ‘blasé’. At the conclusion of the meeting on 30 September 2021, Mr Hancock said that Mr. Ashraf admitted that he had not been exercising sufficient due diligence.

Mr Fatchett showed Mr Hancock the transcript of the meeting made by Mr Ashraf. In answer to the question “Right ok. So you would say that you failed to act with diligence?”, Mr Ashraf said, “Well, I thought I was doing everything fine and being compliant but obviously with these AST checks coming to light and they obviously had a few, fair points which a lot of them were similar kind of points.” Mr Fatchett commented that Mr Ashraf was not, in terms, admitting failing to exercise due diligence in the way Mr Hancock suggested.

Where Tenet identify gaps in adviser knowledge relating to Financial Crime, Mr. Hancock said they would consider retraining, enhanced supervision and support. Because of the other issues being managed by Ms Ford relating to competency (including the removal of Mr. Ashraf’s DB license) his recommendation was that Tenet terminate Mr. Ashraf’s authorisation. His investigation report contained information relating to his findings along with information supplied by Ms Ford. This report was submitted to Tenet’s Board of Directors for approval, on 11 October 2021.

Helen Ball, then Group MD, made the decision to terminate Mr. Ashraf together with Ms Ford. Mr Hancock received confirmation of this by email on 18 October 2021. Before having the opportunity to communicate Tenet’s decision to terminate Mr. Ashraf’s authorisation, Mr. Ashraf called him on 21 October 2021. Since Mr. Hancock knew that Tenet’s decision was to terminate Mr. Ashraf, he informed him of this decision immediately on that telephone call.

On the same day, Mr. Ashraf sent Mr. Hancock an email with a “proposed way forward” suggesting that he would surrender his mortgage license, focus on pension and investments only, have regular individual review meetings and have all his cases pre-approved by Tenet. Mr. Ashraf also stated in the email that this proposed way forward would allow him time to become authorised with another network or directly authorised with the FCA, in a managed way, by 31 May 2022. He forwarded this email for the attention of Helen Ball, Richard Fletcher, and Amanda Ford.

On 4 November 2021 Mr Ashraf wrote to Richard Fletcher at Tenet copying in Mr Hancock, Ms Ford and others. In this letter (the “Appeal Letter”) he said that he was following up on the conversation with Mr Hancock and expressed his disappointment at the outcome of what he described as a limited investigation and the way it was carried out. He provided comments on the four cases Mr Hancock had reported on. These are discussed below. Mr Ashraf complained that he had paid significant fees to Tenet expecting to receive support but had received nothing since the beginning of 2020. He also made similar proposals for working in the future to those he had suggested to Mr Hancock.

Mr Hancock said that he was not involved in dealing with Mr Ashraf’s appeal and he had not read Mr Ashraf’s transcript of their meeting. As far as Mr Ashraf’s criticism of the investigation were concerned, his response was to query why Mr Ashraf did not raise these points during the meeting, which he must have known was important. When cases are pulled for investigation, they are closed on the portal (so the adviser cannot take any actions on them) and so Mr Ashraf would know which files the AST team had looked at and he would expect an adviser to be familiar with them. He said that it would be perfectly fine for an adviser to produce information after the discussion.

As a general matter, Mr Hancock said that Tenet was supportive of advisers unless they posed a risk and were not worth keeping on. He did not think Tenet’s relationship with Mr Ashraf had broken down, but he did think that Mr Ashraf hadn’t done his job properly.

Mr Fatchett asked Mr Hancock about the production of his witness statement and exhibit MH1 in particular. This was produced in the Autumn of 2023. In contrast to Ms Egan’s witness statement, no contemporaneous notes had been exhibited. Mr Hancock said that a “CRM”, “Back Office” system was used to record the details and notes of the investigation. Mr Fatchett explained that the Applicant had made an application for third party disclosure from Tenet and the Tribunal had made an order requiring all documents which relate to the investigation into Mr Ashraf which led to his termination to be disclosed. None of the papers now referred to by Mr Hancock had been disclosed.

Mr Fatchett asked us to adjourn the hearing and make an order that Tenet disclose all information held on their data management (CRM) system whether in electronic or paper form from the period July 2021 – October 2021 relating to the investigation into Mr Imran Ashraf. Having heard representations from Mr Fatchett and Mr Jones, we decided not to grant Mr Fatchett’s application. In brief, our reasons for this were that:

The regulatory reference provided to the Authority by Tenet reads (so far as relevant) as follows:

“An investigation was initiated after Tenet Advice Standards Team identified some Financial Crime concerns with mortgage files submitted to lenders.

Following a review the investigation identified that MIA had submitted one mortgage application with a deposit disclosed to the lender as a loan repayment from a number of family relatives. MIA later submitted gifted deposit letters from the family donors however, remains insistent that the deposit was a loan repayment. The customer on this case was also a relative of MIA. Tenet have suspicions MIA attempted to conceal the gifted deposit.

MIA on another case submitted a mortgage application suggestive of the clients having permanent residence within the UK however did not evidence the relevant VISA documentation stipulating this fact. MIA proceeded to submit this application as a FTB mortgage application. The clients also owned a property in France. This was not disclosed in detail on the mortgage application however, was documented in the fact find.

On one file, MIA also appears to have provided advice to a customer within the United Arab Emirates which is against Tenet policy.

When we discussed these matters with MIA it appeared that in these cases he failed to challenge the origin of deposits and savings, accepting information customers provided without challenge or evidence. Tenet deem that MIA has failed to act with due skill, care and diligence in the process of mortgage applications and poses a Financial Crime risk to the Network.”