The Financial Services and Markets Tribunal has upheld a Financial Services Authority (FSA) case against Allen Phillip Elliott after finding that he is not fit and proper to work in any part of the UK's regulated financial services industry. The Tribunal stated that Mr Elliott's history shows that "he is not able and willing to comply with requirements placed on him by professional rules and obligations" and that he was not open and honest in his dealings with regulators.
The Tribunal found that Mr Elliott "poses a risk to the protection of consumers and a risk to the reputation of the market" and it concluded that a Prohibition Order was necessary "in order to protect consumers from risk and … to maintain market confidence."
Mr Elliott is not authorised by the FSA, but he operates an unregulated mortgage investment scheme through his company FMD Trustees Plc. He obtains client referrals and introductions from authorised financial advisers who may be unaware of his history.
Margaret Cole, Director of Enforcement at the FSA, said:
"It is important that regulated firms who are considering doing business with Mr Elliott are made aware of the risk he poses to consumers. We urge all members of the industry to consider carefully the Tribunal findings against Mr Elliott when considering introducing any client to his unregulated mortgage investment scheme."
In 2002, the Solicitors Disciplinary Tribunal (SDT) struck Mr Elliott off the Roll of Solicitors for misconduct primarily arising from his operation of a previous mortgage investment scheme. The SDT found that Mr Elliott had acted in a systematically dishonest manner, involving secret profit and fees, adding up to hundreds of thousands of pounds over a period of three years, which were not properly disclosed to clients. The SDT found that marketing information was misleading and Mr Elliott had neither assessed the suitability of the investment recommended for clients' particular circumstances nor taken reasonable steps to ensure his investor clients understood the nature of the risks involved in his investment scheme.
This is the first FSA case in which the Tribunal has based its decision on the findings of another disciplinary tribunal. The case sets a precedent for the FSA which means that it may rely on the conclusions of other Courts and Tribunals when considering whether individuals are fit and proper to undertake regulated activities.
Background
1. The FSA's case was heard on 20 & 21 October and 19 December 2005 at the Financial Services and Markets Tribunal in Bedford Square, London. A link to the Tribunal decision can be found here.
A preliminary hearing was held in July 2005 in which the Tribunal decided that the FSA could rely on previous findings against Mr Elliott made by the Solicitors Disciplinary Tribunal. A link to the preliminary decision can be found here.
2. Mr Elliott qualified as a solicitor in Queensland, Australia. In 1988 he was found guilty of unprofessional conduct in connection with mortgage-related investment and financial business which he carried on as a solicitor. In the early 1990s his business failed. Mr Elliott became insolvent and entered into an arrangement with his creditors. Mr Elliott did not comply with the terms of the arrangement and was declared bankrupt in 1995, with losses eventually exceeding Australian $3million.
3. Mr Elliott came to the UK and, failing to declare that he was an undischarged bankrupt in Australia, was admitted to the Roll of Solicitors for England and Wales. He entered into private practice as a solicitor, but his business consisted almost exclusively of promoting and operating a mortgage investment scheme known as the First Mortgage Debenture Monthly Income Plan or 'FMD' Monthly Income Plan. In the scheme, funds contributed by investors were pooled and used to make short term loans to corporate borrowers, who used the money to finance property deals. The loans were usually secured by way of mortgage over the properties purchased. That scheme was operated by Mr Elliott through his solicitor's practice until the Law Society intervention in March 2000.
4. The current scheme, which Mr Elliott operates through his company FMD Trustees Plc, is also called the FMD Monthly Income Plan however this is a different mortgage investment scheme to that which Mr Elliott operated as a solicitor.
5. Mr Elliott is no longer a solicitor in the UK because he was struck off the Roll of Solicitors in 2002 for conduct unbefitting a solicitor. He remains a qualified solicitor in Queensland Australia. However, it is not known whether he holds a current practising certificate there.
6. Mr Elliott has applied to the Financial Services and Markets Tribunal for permission to appeal to the Court of Appeal against the Tribunal's decision.
7. 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; securing the appropriate degree of protection for consumers; and fighting financial crime.
8. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.<
