The Financial Services Authority (FSA) has banned Dr Albert Alphonso Carlyle Waite from carrying out any regulated activity in respect of credit unions for a wilful and persistent disregard for FSA rules. The FSA's decision was confirmed by the Financial Services & Markets Tribunal.
Dr Waite was Chairman of London Adventist Credit Union Limited from 1993 to July 2004. In March 2001, he facilitated a £100,000 investment of credit union funds for the purchase and development of a property in East London which contravened requirements of the previous regulator, the Registry of Friendly Societies. Dr Waite failed to protect the investment by ensuring there was adequate security for the £100,000 and failed to disclose to the board and membership of the credit union the true level of risk associated with the investment.
The FSA also found that Dr Waite did not disclose to the board or the credit union membership the full extent of his personal involvement in the property development and in particular, that he was to receive £55,000 as a result of an investment agreement with the property developer. This constituted a conflict of interest between his role as Chairman and his personal financial interest in the property.
In the hope of making a personal return greater than the £55,000 specified in the investment agreement, Dr Waite put his interests ahead of those of the credit union and consequently failed to secure repayment of the credit union's investment. As a result of these actions, the credit union failed to meet its capital requirement as prescribed by the Credit Unions Source Book. This resulted in the credit union voluntarily varying its own permission to trade in November 2003 in order to preserve its financial position.
Margaret Cole, the FSA's Director of Enforcement, said:
"Dr Waite's conduct demonstrates a wilful and persistent disregard for the requirements and standards of both the previous and current regulatory system. Through his conduct, Dr Waite demonstrated that he is not fit and proper and poses a risk to consumers.
"Credit unions are mutual financial organisations, owned and run by their members for their members. Generally speaking, most members of credit unions are individuals on low incomes who have no access, or limited access, to credit available from larger financial institutions. Dr Waite displayed a lack of openness and honesty with the credit union and he was not willing to comply with regulatory, legal, or ethical standards.
"The FSA will not tolerate people in this industry who threaten confidence in the financial system or pose a significant risk to consumers."
The FSA has also decided to publish a statement censuring the previous board of the London Adventist Credit Union. Despite having been made aware of its Chairman's conflict of interest, the board left monitoring and management of the investment solely to Dr Waite. The board also failed to take adequate or appropriate steps to recover the investment or protect its position and, in particular, failed to take timely and independent legal advice.
The fact that the investment was not repaid resulted in the credit union breaching the capital requirement under FSA rules, which requires that a credit union must maintain a positive amount of capital at all times. Further, because the property was residential, the investment was not authorised under FSA rules. In response to concerns about the conduct of the board and its Chairman, a Special General Meeting was called on 11 July 2004, at which members of the credit union elected a new board. This censure relates to the FSA's concerns about the activities of the previous board, not the new one.
Dr Waite sought the leave of the Court of Appeal to appeal the decision of the Tribunal however leave was refused on 15 March 2006 on the basis that an appeal by Dr Waite had no real prospect of success.
Background
- For a full copy of the Final Notice in the matter concerning Dr Waite, please see the FSA website. The Final Notice in the matter concerning the London Adventist Credit Union is also available on the FSA website.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the appropriate degree of protection for consumers; and fighting financial crime.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
