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Background facts
Background facts
The background facts are not in dispute, and we find them to be as follows.
Promethean’s business is as a “debt packager”. It provides advice to indebted consumers who have vulnerable characteristics. Its advice takes the form of “debt solutions”, namely advice on ways in which its clients can discharge or liquidate their debts. Promethean does not itself provide those “debt solutions”.
Promethean advertises its business using, inter alia, financial promotions published on the internet.
Promethean has been authorised by the Authority to perform regulated activities since 25 July 2016. It has permissions relating to regulated consumer credit activities – including credit brokering, debt adjusting and debt counselling (but excluding the administration of debt management plans), and agreeing to carrying on a regulated activity.
Prior to the events subject to this reference, the Authority had been in contact with Promethean in respect of breaches of the financial promotion rules. In October 2020, the Authority wrote to Promethean about financial promotions that failed to make it clear that Promethean was not qualified to offer debt solutions directly, and that its signposting to free debt advice was not sufficiently prominent. These concerns were resolved by Promethean at the time.
On 6 December 2022, Google updated its advertising policy, to require businesses advertising financial services (including debt advice to consumers) either to be authorised by the Authority, or included in the Register as an exempt professional firm or a recognised investment exchange. It further specified that insolvency practitioners would no longer be able to place advertisements on the basis that they were regulated by a recognised professional body (“RPB”) for the purposes of the Insolvency Act 1986.
In consequence of Google’s new advertising policy, Promethean entered into commercial arrangements with a number of insolvency practitioners (“the IPs”) who offer types of debt solutions. The IPs were not authorised by the Authority, but were authorised as insolvency practitioners by an RPB. Because of the changes to Google’s policies, the IPs were no longer able to advertise to consumers using the Google platform. Under these commercial arrangements, Promethean included the relevant IP’s website domain name on the Register as one of its trading names.
Promethean entered into these commercial arrangements with a number of IPs (some of whom traded under multiple names and had multiple websites). In addition, Promethean was Principal to six ARs. The contract between Promethean and an IP authorised the IP to make use of a specified trading name (in practice the web address(es) for the IP’s website(s)) so that the IP “may continue to advertise to consumers for the purposes of debt advice as defined by [FSMA] as it pertains to insolvency practitioners’ exemption.” The IP was required under the terms of the contract (amongst other things) to comply with the Authority’s rules and with Promethean’s procedures. It was required to refer customers to Promethean if their indebtedness was less than £6000 and they had at least two creditors.
We note that the operation of the Register (at least as regards the inclusion of trading names) is automated – and that trading names can be added to (and removed from) the Register by an authorised firm without any intervention by the Authority. Under the contract the IPs had concluded with Promethean, Promethean added the web addresses of the IPs to the Register as trading names of Promethean. Because the IPs’ websites now appeared as trading names on the Register, the IPs were able to advertise to consumers using the Google platform for the purposes of providing debt advice.
We note also that Promethean’s entry on the Register included warnings that, as well as Promethean undertaking regulated activities, it also undertook activities that are not subject to regulation by the FCA.
Typically, a customer would first engage with the IP, having identified the IP’s website through a Google search or a Google advertisement (the IP’s website was operated by the IP and not Promethean). If the IP was unable to advise the customer, the IP would refer him or her to Promethean.
In October 2022, a consumer complained to the ASA that a website using a Promethean trading name was promoting its services on Google as a “government approved service”. The ASA referred the complaint to the Authority. The Authority’s Supervision Division in consequence reviewed Promethean’s activities, and identified further concerns about Promethean’s financial promotions. The Supervision Division was concerned that Promethean appeared to be in breach of the Authority’s financial promotion requirements in a relatively short period following its previous engagement with the Authority.
On 7 November 2022, the Authority sought to arrange a telephone call with the Promethean, but Mr Maddison instead asked the Authority to put its questions in writing. Later that same day, the Authority wrote to Promethean with concerns about its financial promotions, which appeared not to be fair, clear and not misleading. A number of issues were identified by the Authority, including that there were two websites that stated on their face that they were operated by authorised representatives, but were in fact operated by insolvency practitioners using NGTNs.
The Authority’s letter identified the following concerns:
Google promotions – Annex 2 (Footnote: 3)
CONC 3.9.7R of the Handbook states that in relation to on-line promotions of debt solutions, a firm must not:
seek to use internet search tools or search engines so as to mislead a customer into visiting its website when the customer is seeking free, charitable, not-for-profit or governmental or local governmental debt advice.
We have identified several Google promotions placed by Promethean (under its various registered trading names) that are the top listed results when searching for government-based debt solutions. We are concerned with the firm’s use of search engines in this manner, where the following examples of promotional language are used; “government debt write off,” “government debt help” and “government approved service” “gov legislated solution.” These terms are used in the headline of the adverts as well as in the descriptors. Use of these terms is considered misleading, as the firm is purposefully encouraging consumers to engage in its services under the mistaken belief and false reassurance of receiving information/advice that has been approved or endorsed by the government. Seeking to use internet search tools in this manner suggests that CONC 3.9.7R is not being complied with.
Further, the statement of “IVA Providers – Government IVA Available here” is used by Promethean in its Google promotions. As above, this appears in contravention of our rules in implying government endorsed solutions. Further, CONC 3.9.3R(4) requires that a firm must “state whether any aspect of the services is provided by a third party.” We consider that using this language falls foul of this rule where the firm falsely implies the scope of its services as an individual voluntary arrangement (“IVA”) provider in the Google promotion and fails to subsequently qualify on the landing page of [https://onlinedebtoptions.co.uk/] that it is not within scope of the firm’s services to arrange IVAs directly.
We would like to stress that we wrote to you previously (19 October 2020) regarding similar concerns around failure to make clear on the website of [https://www.prometheanfinance.co.uk/] that the firm did not offer IVA debt solutions directly and while the firm addressed this point at the time, this same breach has been repeated on other websites operated by Promethean.
We also identified that Google promotions direct consumers to a misleading domain name that contains the term ‘government’ within its URL, which for the reasons mentioned above, also appears to contravene CONC 3.9.7R, and expect to be removed as such -www.onlinedebtoptions.co.uk/government.
CONC 3.3.1R(1) requires that “a firm must ensure that a communication or a financial promotion is clear, fair, and not misleading.” Terms such as “no fees” and “no upfront fees” are used across several advert descriptors. While there might be no charge for the initial enquiry, firms should not use terms that could mislead consumers, in the absence of clarity, around the charges payable should they proceed with a debt solution arrangement as set out in CONC 3.9.3R(4).
Examples of practices that are likely to contravene the clear, fair and not misleading rule includes at CONC 3.3.10 (6) “in relation to debt solutions, claiming or implying that a customer will be free of debt in a specified period of time or making statements emphasising a debt-free life or that a debt solution is a stress free or immediate solution.” We are therefore concerned with the firm’s use of unsubstantiated claims around the quantity of achievable debt write-off used in its promotions. You promote the following claims “write off 100% debt” and “85% of debt written off takes 60 secs” which direct consumers to the same landing page of [https://onlinedebtoptions.co.uk/]. The advert fails to qualify the type of debt solution which is being referred or that any write-off in this context refers to unsecured debts only. Upon entering the landing page, there are numerous pop-ups prompting the consumer to click-through directly to “see if you qualify to write off up to 85% of debt.” The landing page fails to subsequently put these figures into context with supporting evidence around achievability of these claims. In the absence of robust documented evidence, we consider it misleading to exaggerate claims in order to persuade consumers to engage with the advertising.
We are also concerned about the use of “it takes 60 secs” and “stop making creditor payments from today” in Google promotion descriptors, which could appear to overstate the speed and ease of agreeing and entering into a debt solution arrangement. We consider such terms as another example of the unfair practices falling foul of our fair, clear and not misleading rule (CONC 3.3.10 (6)), that claim eligibility can be checked quickly and imply that the service is suitable/available to anyone.
Website promotions – Annex 2 - https://onlinedebtoptions.co.uk/
The firm’s services are promoted on Google as offering advice across the full range of available debt solutions. However, the information presented on the home page of [Online Debt Options] is overwhelmingly promoting the benefits of IVAs. Where IVA ‘benefits’ are stated, it is not made clear that some of these are in relation to other types of debt solutions (for example, “all debt written off in 12 months” and “no up-front costs or set up fees” cannot relate to IVAs). There is also a table stating “what debts can be included” which, again, does not state which debt solution is being considered. There are references to “other debt solutions” towards the foot of the page but the information is minimal and the option for the consumer to click-through to “more info” only redirects the consumer back to the head of the same page and is not providing any additional information relevant to those solutions. We do not consider that this mismatch of information, both in its ordering and presentation, meets our clear, fair and not misleading rule. Information should be presented in a way that is likely to be understood by the average target consumer in identifying what statements relate to which debt solution. CONC 3.9.3R(9) also requires that “where the financial promotion or communication sets out detail of how a customer might resolve debt problems by explaining options, the most important actual or potential advantages, disadvantages and risk of each option…” should be stated.
As stated above, the home page of [Online Debt Options] heavily promotes the advantages of entering into an IVA, but with no statement of the risks and disadvantages of this arrangement, which is required under CONC 3.9.3R(14). This rule sets out a prescriptive set of risks that should be clearly and prominently displayed. It is concerning that the consumer can pursue an eligibility check at the very start of the customer journey, without an understanding of the relevant risks.
Further, the consumer must choose to click-through to a separate landing page in order to view frequently asked questions of [Online Debt Options]. While the FAQs would appear to prompt statements outlining the risks/considerations of entering into an IVA, they fail to do so sufficiently and in some cases are misleading.
For example, the section on “who will know I have an IVA and will it be made public.” While the firm states that “details are put onto a public register” this is followed by “but it is highly unlikely that anyone will check it” which downplays the impact of the public statement of notice. This is also followed by statements such as “this is one of the reasons why an IVA is favoured over Bankruptcy as it is more private.” We are concerned that the firm is using promotional language to promote the IVA option as a favourable debt solution.
Similarly, the section on “why should creditors write off some of my debt” states that “an IVA is simply a better deal for you and your creditors. If you were bankrupt the creditors would get less money, you could lose your home, car and not be able to serve as a company director.” This appears to inflate the benefits of an IVA as a favourable arrangement, and also directly contravenes our rule that requires explicit statements that failure to make IVA payments could lead to bankruptcy as required under CONC 3.9.3R(14)(a). Furthermore, the section on “what happens if I miss an IVA payment” fails to state the direct consequences of bankruptcy resulting from missed IVA payments.
The section on “what if some creditors don’t agree” states that “there are a small number of lenders who vote against IVAs almost as a matter of principal [sic]. We know who they are and we will be able to advise you when we prepare your income and expenditure statement whether any of your creditors are on the awkward squad list.” We are concerned that such statements could imply that the firm can guarantee a favourable outcome in negotiations with a lender concerning the customer's debts, in contravention of our rule under CONC 3.9.5R(4).
There is a call-to-action (pop-up) on the home page of [Online Debt Options] requesting the consumer to click-through to get a “free debt check.” The pop-up is refreshed and prompted at one-minute intervals. It states, “take the debt quiz to see what help you qualify for…its free and takes less than 60 seconds” which we consider could be interpreted as unfair, unclear and misleading. Promoting eligibility checking in the form of a ‘quiz’ could be considered trivialising the important decisions around debt management. The statement used also implies that there is a debt solution available to the enquirer should they pursue the next stage of the customer journey, which cannot be guaranteed. It is also unclear whether the information required to input in the “see if you qualify/free debt check” is sufficient for the firm to commence an initial enquiry where it is limited to contact details and “amount of debt” only. The firm should consider the examples of unfair practices outlined in our Guidance of CONC 3.3.10G with specific reference to (7) “providing online tools, which recommend a particular debt solution as suitable for a customer, such as, budget calculators or advice websites; (a) which do not carry out a sufficiently full assessment of a customer's financial position; or (b) which fail to provide clear warnings to a customer that financial data entered into a tool has to be accurate.”
The interactive video used on the home page of [Online Debt Options] as an “IVA example” states a “95% acceptance rate” for IVAs without any sufficient or prominent qualifying information to substantiate this claim. Failing to do so, could fall foul of our fair, clear and not misleading rule.
The “IVA example” both in interactive video format and storyboard format, uses an example of the monthly payments before and after an IVA agreement (“reduced to £100” or “could be as low as £70”). It is potentially misleading to omit information on both examples regarding the fees payable to the Insolvency Practitioner for entering into the IVA (CONC 3.9.3R(4)) and that the service is arranged by a third party (CONC 3.9.3R(2)).
The disclaimer at the foot of the home page of [Online Debt Options] states “We do not sell or buy IVA/Debt leads” which we believe is potentially misleading as we understand that the firm packages the advised debt solution (primarily IVAs) and refers the consumer on to an insolvency practitioner for a fee.
Website promotions – Annex 2 https://avoid-bankruptcy.org/
A paid-for advert stating, “see if you can get debt relief – includes council tax” directs consumer to the landing page of [Avoid Bankruptcy], one of the trading names of Promethean, which is promoting “get debt free in 12 months using a debt relief order” and “write off all your unsecured debts.” On the basis of minimal information concerning eligibility or key considerations, the consumer is then requested to “find out now if you qualify.” The lack of any substantive information particularly concerning the risks to consider before entering into a debt relief order (DRO) falls foul of our expectations under CONC 3.9.3R(9).
IVA arrangements are suggested as an alternative solution on this landing page of [Avoid Bankruptcy] described as “our solution” that “we are required to review your financial situation first [...] we then help you send a proposal to your creditors that includes all eligible debts.” As far as we understand, Promethean refers customers to a third party arranger to carry out this assessment. In which case, it is misleading to imply that the firm is qualified to do this in-house. This is a common theme of confusion across the websites operated by Promethean whereby it is not made clear “whether any aspect of the services is provided by a third party or at extra cost” as required under CONC 3.9.3R(4) as well as “the relationship with a business associate which is relevant to the services offered in the promotion” as per CONC 3.9.3R(2).
Similarly, the disclaimer information provided at the foot of website of [Avoid Bankruptcy] neither provides a clear statement of the regulated services the firm offers (CONC 3.9.3R(1)) nor a clear unconflicted statement regarding the relationship between Promethean and Quality Insolvency Services Ltd (CONC 3.9.3R(2)). The language used appears to suggest that this website is being operated through the unauthorised entity under the trading name of Promethean, which it cannot do. CONC 3.3.1R(1A)(d) requires that communications must be “sufficient for, and presented in a way that is likely to be understood by, the average member of the group to which it is directed, or by which it is likely to be received.” We expect the firm to consider and mitigate any conflicting statements across all websites operated by Promethean under its registered trading names.
In addition, aligned to the concerns expressed in paragraph 7, the firm fails to state eligibility for the IVA and importantly does not state any of the risks involved as required in CONC 3.9.3R(14).
The signposting to Money Helper at the very foot of the page, in the disclaimer section, is not sufficiently prominent to meet the requirements under CONC 8.2.4R. It is very possible that a consumer could bypass this key information. We would stress that this prominence point was also raised with you on 19 October 2020.
C - Website promotions by Appointed Representatives – Annex 2 https://www.unitedinsolvency.com/
Promethean as a Principal is responsible for the financial promotions of its Appointed Representatives. United Insolvency Ltd is an AR of the firm and there are misleading statements on the website of [United Insolvency], it is misleading to state the advantages of entering into an IVA as “no upfront fees” where a fee is payable for entering into the IVA agreement. It is also misleading to state that it “helps you avoid bankruptcy” as the direct consequence of failing to keep up with payments could lead to bankruptcy, which is also stated as a risk (CONC 3.9.3R(14)(a)).
Aligned to paragraph 5, it is misleading to list the advantages as “write off up to 81% of your debt” without robust documentary evidence to qualify this claim.
The signposting to Money Helper at the very foot of the page, in the disclaimer section, is not sufficiently prominent to meet the requirements under CONC 8.2.4R. It is very possible that a consumer could bypass this key information.
The disclaimer on this website states that “United Insolvency Ltd is authorised and regulated by the FCA under reference 832916, as an appointed representative of Promethean Finance Limited.” This is not correct as Appointed Representatives are not authorised persons and should not be stated as such.
We have identified that the following websites operated under trading names of Promethean (added on 26/10/22) are falsely stating to be Appointed Representatives of Promethean:
‘ukdebtplan.co.uk’ (https://www.ukdebtplan.co.uk/) and ‘stopbailiff.co.uk’ (https://www.stopbailiff.co.uk/). We understand the recently added names to be other operated trading names and not new Appointed Representatives, therefore such statements should be rectified to this effect.
We expect the firm to conduct a review of the financial promotions of all its Appointed Representatives and mitigate any breaches of the applicable rules, including but not limited to the breaches identified in this letter.
D - Website domains as trading names
We understand that Promethean has added ‘www.MoneyAdvice.co.uk’ as a registered trading name (effective 24/10/22) and has the associated website. The firm should set out how it has considered its obligations under CONC 3.9.7R(2) regarding the use of this trading name, given the potential to imitate similar named charitable organisations (such as Money Helper and the former Money Advice Service) and its resulting positioning on search platforms. Our position on how authorised firms may use trading names is set out at https://www.fca.org.uk/firms/firm-details/trading-names.
We also understand that Promethean has added ‘www.rainbowloans.org.uk’ as a registered trading name (effective 26/10/22) and has the associated website. Promethean also has “www.avoid-bankruptcy.org’ as a trading name (effective 28/07/22) and has the associated website. The use of “org” within a trading name is not permitted unless the firm is either a charity or not-for-profit organisation. We do not consider that Promethean is either of these and therefore the trading name and website is misleading. We expect this to be removed accordingly.
E - Promotions under other trading names of Promethean
We understand that Promethean places Google promotions and operates a number of websites under various other trading names. We expect the firm to address any breaches of our rules, including but not limited to the breaches identified in this letter, across all forms of advertising under its operation.
Promethean was invited to agree to a “voluntary imposition of a requirement” (“VREQ”) which included, amongst other things, a requirement that it must conduct a review of its systems and controls, and its policies and procedures in relation to both its own financial promotions and those of its ARs. The terms of the VREQ were attached to the letter as Annex 1.
Also attached to the letter, as Annex 2, were screenshots of the Google advertisements and of the websites that were discussed in the letter. Mr Maddison did not dispute that the screenshots were accurate copies of the advertisements and websites, and we find that the description of the advertisements and websites in the letter was accurate (we address the evaluative conclusions drawn in the letter in the discussion below).
Promethean responded on 14 November 2022 declining to enter into the proposed VREQ on four grounds. These were:
It had removed two domain names from the Register and that it planned to commence work to ensure another trading name complied “within guidelines”. It had amended disclaimers on three websites, and it had also “brought up to standard” the content of another trading name relating to an AR’s website.
Promethean stated that most of the issues identified by the Authority related to independent IPs, authorised by an RPB, and with whom Promethean had a commercial relationship:
All the website properties that the authority has highlighted, apart from those of some ARs & rainbowloans.org, as a concern to the firm are all professional entities, by virtue of the Insolvency practitioner’s authorisation by their respective RPB’s who rely on their powers granted by the Secretary of State for BEIS. These are:
www.avoid-bankruptcy.org.uk IP name: Adam Boys
www.debthelperteam.co.uk IP name: Adam Boys
www.swiftdebthelp.co.uk IP name: Adam Boys
www.ukdebtplan.co.uk IP name: Mark Littleton-Gray
www.stopbailiffs.co.uk IP name: Mark Littleton-Gray
www.moneyadvice.co.uk IP name: Gregory Mullarkey
www.onlinedebtoptions.co.uk IP name: Catherine Varney
In reply to point 2, the authority makes regarding Promethean Finance not offering debt solutions directly, this is true, but in consideration of the point made above, the firms which ultimately operate and own the trading names are able to, therefore not misleading.
The Firm has a commercial relationship with these IPs where the websites in question, generate some enquiries for Promethean Finance Limited.
We are aware of the rules around trading names, specifically, that having a trading name is not a work around from becoming a full Appointed representative. But the firms in question are exempt and a trading name confers no legal status on its own.
On the contrary, there is no need for the firms in question to become ARs in full status, due to the exemption in FSMA Part 2 Chapter 17 Article 72H.
The reason why these sites have become Trading Names in the first instance, is because Google/Alphabet, is due to change its rules around debt advice servicing on its platforms from 6th December 2022 onwards. Specifically, where all advertisers must also be approved for the Financial Services and Products policy which requires sites to follow FCA rules and guidance for financial promotions.
As already stated, we have a commercial relationship with the firms preceding the change, so for them to be able to keep supplying us, it was deemed appropriate the sites, would have to fall under our compliance framework in due course.
The sites are still in the control of the IPs listed above and all promotions fall within their scope, we are in the process of bringing the trading names within our compliance structure, in time for the change of policy by google on the 6th of December.
We thought it was prudent to issue the sites on the register now, so as not to risk any potential lag up to 6th December, as there may be a marked increase in applications to google and the Authority respectively.
The financial promotions of the sites also fall under the exemptions in the FSMA Financial Promotions Order 2005, Part 6 Article 55B by virtue of FSMA Regulated Activities Order 2001 Part 2 Chapter 17 Article 72H.
We have also relied upon COBS 4.10.10 R when deciding whether the promotions highlighted by the authority in question and any others, are within the firms’ financial promotions rules and guidelines.
The Rules in COBS seem to the firm, to predominantly relate to unauthorised entities, but as the Authority surely will appreciate, Insolvency practitioners are exempt from authorisation as per FSMA Article 72H, as follows, promotions that fall within this scope are also exempt.
With the facts stated above, there appears to be a measured amount of ambiguity between conflicting regulatory status’s, which the firm has tried to find a middle ground between.
We think that, in hindsight, in consideration of the dual regulatory nature of the entities in question that it would be advisable to have a more precise regulatory statement on the website so as not to confuse consumers about who is responsible for areas of compliance. Which can be rectified, we think, with relative ease.
As regards consumer detriment, Promethean considered that no such detriment had occurred. No complaints had been upheld against Promethean or the ARs. The IPs were regulated by RPBs and had robust procedures in place to ensure compliance with their own rules and guidance.
As regards specific domain names, there have been restrictions on the use of the “.org” domain name for the last 15 years. However, in the interests of good faith, it had applied to remove the websites using the “.org” domain names from the Register pending further discussions with the Authority. As regards “moneyadvice.co.uk”, Promethean did not regard the name as misleading, especially as the legal name of the owner was “Money Advice Limited”. It was open to the Money Advice and Pensions Service (“which is a body corporate and are not crown employees”) to take civil proceedings in relation to its intellectual property rights if it wanted to.
Promethean stated that it was willing to enter into an undertaking to adhere to the contents of the voluntary requirements relating to amending financial promotions and communications across websites under its operation, conducting a review of its systems and controls and policies and procedures in relation to its own financial promotion activity, providing the Authority with details of the outcome of the review, and providing a report of the number of financial promotions withdrawn or amended - but subject to whether the requirements would be amended. However, it was not prepared to amend or withdraw all financial promotions across all trading names operated by it and those of its ARs that failed to comply with the Authority’s Handbook of Rules and Guidance.
It was only as a result of Promethean’s letter of 14 November 2022, that Authority became aware of the fact that the websites registered as Promethean trading names were not in fact websites operated by Promethean or for which it was responsible. It was only at this stage, therefore, that the Authority became aware that Promethean was registering trading names on the Register which were not names (other than the firm’s official registered name) being used by Promethean to carry out its own business. It was also at this stage that the Authority became aware that many of the financial promotions rule breaches raised in its 7 November letter in fact related to promotions for or on websites operated by independent IPs, (with the exception of some also related to Promethean’s ARs and one to itself).
The Authority was also concerned that Promethean’s explanation for registering IPs’ trading names may not have been accurate, as the first such trading name was registered in March 2022, seven months before Google announced its new policy (October 2022) and nine months before the policy came into effect (6 December 2022). Mr Maddison’s evidence was that the operators of the websites registered prior to Google’s announcement may not have had a full-time (or any) IP, so they “packaged cases out”, and referred their customers to Promethean. Mr Maddison said that this was a “commercial opportunity” and he “just sold the opportunity on”, paying the originator a percentage of the amount Promethean obtained from the case. So, in the case of onlinedebtoptions.co.uk, it was “purely a lead generator”.
Mr Maddison was asked why he used the websites of IPs to generate referrals, rather than advertise Promethean (or its ARs) on Google itself. Mr Maddison’s evidence was that Google’s previous policy was not to allow authorised firms to advertise unless they were authorised to hold client money, so Promethean could not advertise itself. In consequence, Promethean relied on referrals from IPs to generate references through Google advertisements.
The Supervision Division of the Authority decided not to take forward Promethean’s suggestion of an undertaking instead of a VREQ, because it considered that a VREQ was the appropriate and proportionate action given the scale and severity of the issues.
On 17 November 2022, the Authority sought to arrange a telephone call with Promethean, but it declined the call and offered to communicate by email instead.
The Authority wrote again to Promethean on 30 November 2022 requesting details of how Promethean would address all of the issues raised in the 7 November letter, clarification on the use of trading names by insolvency practitioners, and details of the contractual arrangements in place with them. The Authority noted that Promethean had registered 20 trading names (excluding its own legal name), and requested information about them (to the extent not previously provided). Promethean was reminded that it must not use the Register to record trading names owned, controlled, or used by third parties as trading names of Promethean.
Promethean replied on 7 December 2022 (although the letter attached to Promethean’s covering email is dated 14 November 2022) stating it had addressed the risks identified by the Authority or considered that the further steps envisaged in the proposed VREQ were unnecessary. Promethean stated that a VREQ would have serious reputational consequences for the firm, potentially affecting its viability and that it considered the Authority could be biased towards Promethean and the debt packager industry due to a Consultation Paper it had recently published (CP21/30) to potentially end the debt packager market. Promethean stated that it had removed non-compliant advertisements from Google, had adequate systems and controls in place, and “all the sites apart from some ARs (where only minor points were made about disclaimers and such were made) are all dual regulated”.
As regards the NGTNs, Promethean stated that
[…] the trading names is a facilitation service, which is required to maintain the [insolvency practitioners’] current marketing services, brought about by a non-regulated entity, which is a private organisation and has no regard to consulting any of the parties the change affects, Authorised firms, [insolvency practitioners], regulators, RPB’s and most importantly consumers.
We will not be using the trading names, the trading names are used by parties where there is a commercial contract between us and them, the trading name element of the contract is to facilitate the sites’ continued advertising practices.
Having them as a trading name does not confer a legal or regulatory status on the firms who own them or the sites themselves as per the Authorities rules.
It was this firm’s intention to bring the trading names in line with the firm’s financial promotions policy as per our first letter of 7th November, but on consideration of the RPBs guidance it appears to us this is not necessary.
A copy of the form of commercial agreement concluded between IPs and Promethean was attached to the letter. Relevant provisions of the form of agreement include the following:
Under this Agreement, [Promethean] authorises the Firm to:
Make use of the trading names listed below, so that it may continue to advertise to consumers for the purposes of debt advice as defined by the act, as it pertains to insolvency practitioners’ exemption.
XXXXXXXXXXXXXXXXX
The Firm undertakes that it shall not during the appointment:
Provide or offer to provide any form of Debt Counselling, Credit Broking advice or any other regulated activity as defined by the act to consumers. Unless advice is given in reasonable contemplation of an Insolvency Appointment, as the firm is a licensed insolvency practice.
Pursuant to the following handbook guidance: Paragraph 52 of the Schedule to the Financial Services and Markets Act 2000 (Exemption) Order 2001, as amended by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2013 Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, as amended by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2014
Pledge the credit of [Promethean], sign documents on behalf of [Promethean] or otherwise purport to represent or commit [Promethean];
Without the prior written approval of [Promethean] issue any Debt Counselling & Credit Broking Advertisement or financial promotion, or other document relating to [Promethean], its services or its appointed representatives;
Give cover on behalf of the [Promethean] for any risk;
[…]
Under this Agreement, the Firm agrees:
To conduct the Business in accordance with the terms of this Agreement;
That it and its Staff shall comply to [Promethean’s] satisfaction with the Procedures;
That it shall and shall procure that its Staff shall at all times, comply with the Rules, the Act and any applicable legislation or regulations or codes of practice insofar as they relate to the carrying out of its obligations under this Agreement (together, the “Legislation and Regulations”);
[…]
Business stationery and advertising
The Firm agrees to comply with the FCA Rules in relation to the disclosures required to be made on all stationery which it uses in conducting the Business on behalf of [Promethean].
The Firm agrees to use the stationery, notices, advertisements or other similar material supplied and/or approved by [Promethean] and not to display or use any such material in connection with the Business which has not been so approved. (Footnote: 4)
Mr McGruer’s evidence was that he did not believe that Promethean had conducted a review of its financial promotions or those of its ARs, or otherwise conduct a review of its policies and procedures governing financial promotions following the Authority’s request of 7 November 2022 (although Promethean made some changes to an AR’s website that the Authority had specifically identified, he believed that Promethean had not conducted a more holistic assessment of its financial promotions or those of its ARs). Mr Maddison was cross-examined on this point, and his evidence was that as Google was a dynamic platform, it was difficult to review the Google advertisements themselves. If an IP was running several hundred advertisements, it was not possible to see them all. He did check the Google advertisements if they appeared when he undertook his review, and he checked the home pages of the websites listed as Promethean trading names. Mr Maddison’s view was that the IPs were outside the perimeter of regulation by the Authority, as they were regulated by the RPBs, and were either exempt or excluded from regulation by the Authority.
As it appeared to the Authority that Promethean had not conducted a proper review of its (and its ARs) financial promotions, nor conducted a review of its policies and procedures, and its actions had not addressed all of the issues of concern, the Authority wrote again to Promethean on 15 December 2022 with a second proposal for a VREQ. The letter reaffirmed that where a registered trading name is used in communication with a customer, Promethean had to ensure that the communication was clear, fair, and not misleading. Further, the Authority was concerned that Promethean’s use of trading names was intended to allow unregulated entities to circumvent Google’s advertising policy. The letter noted that Promethean had registered a further 15 trading names since the 7 November letter, despite being aware that the Authority had serious concerns about this practice. The proposed VREQ set out the following requirements:
Requirements
The Firm must remove all non-genuine trading names registered with the Authority that are separate legal entities and not reflective of the business activities of Promethean Finance Limited within 48 hours of the Requirements coming into force;
The Firm must cease all regulated activity until doing so, without the prior written consent of the Authority;
The Firm must not use any new trading names without the prior written consent of the Authority;
The Firm must provide data confirming the number of referrals generated from all registered trading names (including previous registration) to the Firm effective 10/03/22 to date within 5 days of the Requirements coming into force.
On 20 December 2022, Promethean wrote to the Authority declining to enter into the second proposed VREQ on the grounds that the trading names were exempt from authorisation, and the financial promotions “also fall under the exemptions in the FSMA Financial Promotions Order 2005, Part 6 Article 55B by virtue of FSMA Regulated Activities Order 2001 Part 2 Chapter 17 Article 72H”. Further, trading names are not separate legal entities. Promethean suggested that the Authority’s concerns could be addressed by including the following statement on websites to clarify which activities are regulated and which are not:
when making an enquiry on this website, if your debt level after further investigation which may include a phone call, is less than £6,000, we may transfer you to Promethean Finance Limited, which is our preferred FCA regulated partner to continue your enquiry, with your consent.
Promethean stated it thought there was actually no need for such a statement because it considered that the IPs are “exempt”, and that the listing of the trading names on the Register did not imply regulatory status. Further, there was no risk of consumer harm because the trading names “cannot be found by the consumer on a layman’s search of the internet”. Promethean also stated that it believed the Authority was acting unreasonably.
Between 15 December 2022 and 21 March 2023, Promethean registered a further 19 trading names, which the Authority considered to be further websites operated by IPs and not by Promethean. By 21 March 2023, Promethean had 32 trading names registered, of which 30 were the active website domain names of IPs, and two were genuine trading names. In the course of reviews of Promethean’s financial promotions and communications conducted by the Authority in January 2023 and March 2023, the Authority identified further concerns of the kind identified in the 7 November 2022 letter. The following examples were given in Mr McGruer’s witness statement:
Failing to signpost to free impartial advice in one instance (www.debtadvicenow.co.uk) as well as lack of prominence when doing so in another instance and using an outdated referral to the previous Money Advice Service;
Making unsubstantiated claims of “up to 81% write off of unsecured debt with government legislation” and “write off up to 75% of unsecured debts” (contrary to CONC 3.3.10G(6));
Stating advantages of IVAs as “no upfront fees” (a breach of CONC 3.3.1R(1));
Lacking balance when promoting the benefits of IVAs and Trust Deeds without stating the relevant disadvantages (a breach of CONC 3.9.3R(14));
Falsely stating the name of an AR as a trading name of Promethean, as opposed to the AR (a breach of CONC 3.3.1R(1); and
Stating the entity issuing the promotion is an AR, when it is in fact registered as a trading name of Promethean (a breach of CONC 3.3.1R(1)).
- Heading
- Introduction
- Procedural matters
- The law
- The Register
- FCA Handbook
- High level standards
- Specialist sourcebooks
- Other Guidance
- Requirements
- Debt Counselling
- Background facts
- Screenshots of these websites were included in the Hearing Bundle
- The Tribunal’s jurisdiction
- Submissions
- Mr Fell submitted that Wilson demonstrated the importance of consumer protection as a matter of public policy, and that similar important concerns arise in this case
- Discussion
- Further observations
- Conclusions