Ex- drug dealer possibly fit and proper

Although we are reluctant to reference the Mail on Sunday, their “ace investigator” recently uncovered a case that has some relevance for the SM&CR fit and proper person regime.   James Scotney the director of Town & County Law Ltd of Lincoln, a fully FCA-regulated credit broker, was found to have a criminal record for dealing in Class A drugs.

According to the information, Scotney admitted dealing with Class A drugs at Lincoln Crown Court in 2010. Police found sachets of cocaine with digital scales during a raid on the residence of the “semi-professional pool player”. It was revealed he had made more than £10,000 peddling drugs and was sent to prison for 15 months. Scotney reappeared in court a few years later and pleaded guilty to failing to disclose information about who was driving the car at the time of the earlier offence. He then received a £550 fine and six points on his driving licence, committing a driving conviction.

The FCA’s view

The FCA rules state that all individuals working in the financial services must disclose any spent and unspent criminal convictions, and each employer must perform a DBS check to confirm the applicant’s information. As the company’s sole director, it might be thought that this company confirmation would carry little weight. The article does not make it clear whether Mr Scotney failed to fully disclose his convictions or that the FCA was fully apprised and decided to declare him a fit and proper person regardless.  The Regulator’s only comment to the tabloid was “We are looking again at the circumstances surrounding the disclosure of Scotney’s conviction.”

The FCA is not a detective agency, at least in this regard and necessarily relies on self-disclosure. They insist on full disclosure and the submission of false or misleading information may constitute a criminal offence. However, in the event that a person’s history has been fully-disclosed, their openness and transparency will count in their favour if the FCA has to assess potentially adverse events. Their criteria are open-ended and non-restrictive, but focus on a judgement as to:

  • honesty (including openness with self-disclosures, integrity and reputation)
  • competence and capability
  • financial soundness

Therefore, despite the Mail on Sunday’s obvious indignation, it is not impossible that Mr Scotney was assessed positively in light of all the information.

Despite the scarce detail to date, the “case” may still be usefully compared with that of Frensham, covered here. Another case that did not directly involve dishonesty, Mr Frensham had been convicted of grooming a minor, but argued this was not indicative of a lack of integrity and therefore he should be able to retain his FCA approval. The tribunal ruled in the FCA’s favour specifically citing Mr Frensham’s lack of disclosure and transparency, finding these elements to show a proclivity to dishonesty. While the decision of the later appeal case was more nuanced, significant reliance was placed on Mr Frensham’s lack of disclosure effectively trumping his ECHR Article 8 right to a private life.  While Mr Scotney’s ultimate fate in this respect remains to be seen, his situation should act as a reminder that past misdeeds may not preclude one being judged a fit and proper person and that full disclosure to the FCA is non-negotiable.