Upper Tribunal Tax and Chancery Chamber

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

Fecha: 17-Jun-2024

The Authority’s submissions

The Authority’s submissions

87.

Mr. Jones says that the Authority clearly satisfies the first stage test in Köksal. Its reasons are well explained and well-reasoned in the Decision Notice. That Decision Notice is founded on two regulatory references from Mr. Ashraf’s two previous principals. This was reinforced by the competency interview with Mr. Ashraf, from which the Authority formed the view that Mr. Ashraf did not appreciate the seriousness of the issues identified and the potential for resulting consumer harm. The Decision Notice considered the commonality in the issues raised about Mr. Ashraf by the two principals and properly considered, and responded to, representations made on behalf of the Applicant. Mr Fatchett did not raise any argument that the Authority failed the first stage test, and we agree with Mr Jones on this point.

88.

As regards the second stage in the analysis, whether there are there matters justifying remittance to the Authority for reconsideration, Mr. Jones says that the Applicant has not come anywhere near identifying any such matter.

89.

As far as the SJP reference is concerned, the evidence received little challenge from Mr. Ashraf. It was not put to Ms Egan that her findings were incorrect. Indeed, under cross examination, Mr. Ashraf, accepted that the findings made by Ms Egan concerning (i) virtually identical client fact-finds; and (ii) breach of SJP’s processes in completing client declarations were correct. Mr. Ashraf also admitted that he had fabricated missing suitability letters, to give to Ms Egan, albeit that he maintained he was merely creating letters he thought he had already sent.

90.

It is wrong to say that the SJP reference is too old to be considered, or to be given much weight at all. That may be a relevant factor, but it is not determinative. Mr. Jones points to three matters here:

(1)

In this application for Authorisation, Mr. Ashraf omitted all reference to the fabrication of suitability letters as a reason for his dismissal. Mr. Ashraf was not transparent about concerns over his lack of transparency. The SJP regulatory reference accordingly remains current, evidencing a concern that appears in the application for Authorisation.

(2)

This lack of transparency was also apparent from Mr. Ashraf’s oral evidence. Under cross-examination the contrast between (i) Mr. Ashraf’s witness statement, where he said repeated failures to secure an alternative appointment prompted the application for authorisation and (ii) the Competency Interview, where it was suggested that a failure to secure authorisation would result in Mr. Ashraf seeking authorisation as an AR under a third principal was explored. When challenged that both could not be true Mr. Ashraf admitted that what he told to the Authority was a “white lie” because he did not want to appear desperate in his application.

(3)

Third, the contention that the SJP regulatory reference is of limited importance because the Authority was prepared to authorise Mr. Ashraf as an AR under Tenet in 2015 is misplaced. As discussed during the cross-examination of Mr. Ashraf, the Authority was concerned about the matters in the SJP regulatory reference. The Authority was concerned about the regulatory reference, but was comforted by the regulatory oversight Tenet promised. The absence of this ongoing oversight was a key factor in the decision to refuse authorisation.

91.

As regards the Tenet termination, Mr. Ashraf has multiple criticisms of how Tenet dealt with him. However, so far as the factors discussed in MH1 are concerned, it is striking how few of the factual points Mr. Ashraf disagreed with when taken through MH1 in cross-examination. The factual narrative in Tenet’s reference is borne out. The reference contains value judgments (most importantly, that “Tenet deem that [Mr. Ashraf] 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.”) but these are all judgments open to Tenet based on the facts they explored.

92.

Mr. Ashraf says that the Tenet regulatory reference makes a series of minor points and inflates them to an unwarranted and unjustified degree. Mr. Jones does not agree that deliberately completing forms for mortgage applications incorrectly, or with at best wholly confusing information as to the source of the deposit, are minor points. Even if the Tribunal and/or the Authority were to accept that the points relied upon by Tenet were minor, the concerns are still of a severity to lead to this reference and this Decision Notice; one minor point is a minor point, a multitude of points is an issue.

93.

Mr. Jones says that, considering the two regulatory references, there can be no serious contention that the Authority did not properly balance the evidence before it in reaching a decision. The references indicate significant and serious failures. Furthermore, there is a commonality in the failures identified by SJP and Tenet. Mr. Ashraf failed, at both principals, to follow proper procedure. This is accordingly a pattern of conduct. Patterns of conduct from an advisor who had been engaged in the industry since 2006 are concerning and rightly taken into account. The two rather limited positive references (at [73] above) do not alter the important and determinative effect of the two regulatory references.

94.

He also says there is a commonality in the lack of transparency demonstrated by Mr. Ashraf during the SJP investigation and this Application.

95.

Finally, there is nothing in Mr. Ashraf’s contention that certain failures can be put to one side as they relate to mortgages, which will not form part of the Applicant’s business. Proper process, proper fact-find, proper steps to avoid and mitigate the risks of financial crime apply across the spectrum of providing financial advice. The failures identified are clearly relevant.