A sorry tale of consumer credit rejection at the Upper Tribunal

Posted on 07 November 2016

A sorry tale of consumer credit rejection at the Upper Tribunal

We have previously set out the background to the need for firms carrying on consumer credit activities to be authorised by the FCA (see Enforcement Watch 19 "Debt management companies suffer in the Tribunal").  Now, a Decision of the Upper Tribunal released on 7 November 2016 sets out the rather sorry tale of the rejection by the Tribunal of the reference by Köksal t/a Arcis Management Consultancy. 

To cut a rather long story short, Köksal had been involved in financial services since 1989.  He had been authorised by the FCA in 2004 to carry on mortgage and non-investment insurance contracts related activity.  However, he voluntarily gave up his mortgage permissions in 2012 under some pressure from the Authority, who "invited" him to do so due to various concerns.  He subsequently reapplied, but was refused.   

As regards consumer credit activities, Köksal had previously held an OFT licence.  The reference to the Tribunal that is the subject of this piece related to the refusal by the FCA by way of Decision Notice to vary his existing permissions to include consumer credit activities.  (To add to his woes, along the way, when his interim permission for consumer credit activities had lapsed, Köksal made an application to the Tribunal to have its effect suspended. However, the Tribunal refused to make the order.)

Köksal had adopted a somewhat confrontational approach in the course of his application to vary his permissions. He gave scant information and he also relied to an extent on his long experience instead.  In addition, he plainly misunderstood that certain of his activities required to be regulated.  Ultimately, he received the Decision Notice because the FCA was not satisfied that he would satisfy the Threshold Conditions.  This was for various reasons, including his failure to a great extent to provide information.

The Tribunal ultimately dismissed the reference.  It concluded that the FCA had been entitled to ask for the information in order to make an informed decision, but that the information had not been provided.  The FCA was therefore entitled to find that the application was incomplete.  Further, the Tribunal agreed with the FCA that the manner in which Köksal dealt with the FCA in relation to its requests for information meant that the FCA could not be satisfied that he would engage with it in an open and co-operative manner.  The Tribunal concluded that the decision to refuse the application had been within the range of reasonable decisions.  The Tribunal then went on to consider whether any findings of fact since the Decision Notice meant that the FCA's decision remained one which fell within the range of reasonable decisions, or whether the Tribunal instead needed to remit the matter back to the FCA. (See elsewhere in this issue for a discussion of the Upper Tribunal's role "20 October 2016: Upper Tribunal has last word on Carrimjee case"). The Tribunal found that it could not be satisfied that there had been any material progress in providing the information since the giving of the Decision Notice.  The reference was dismissed. 


It is no surprise that the Tribunal dismissed the reference.   However, what was interesting about the decision was the context in which it happened.

  • In a postscript, the Tribunal said that "This is a sorry outcome for Dr Köksal but it is of his own making".  Essentially, there was now a large part of his business that he could not carry on.  From the limited information seen by the Tribunal, the Tribunal said that it appeared that he had performed a valuable service for his client base and could achieve good outcomes for his customers. The Tribunal thought that it would be a "shame" if his business could not be maintained. 

    What comes across clearly is that Köksal had simply not engaged with the process, nor with the underlying reasons for it.He had also plainly failed to understand the different environment in consumer credit now as compared to previously. In the circumstances, Köksal did himself no favours in making his case. The Tribunal had no option but to dismiss the reference.
  • The Tribunal also said that it hoped that the FCA could learn some lessons from what had clearly been a difficult experience and which had resulted in it unnecessarily having to devote considerable resource in dealing with what could have been a routine application had Köksal been more co-operative.  The Tribunal thought that the FCA could perhaps have been more helpful, when it was clear that a firm was struggling with the complexity and opaqueness of some of the regulatory provisions.  However, in the same breath, it recognised "the resource constraints" within which the FCA had to operate in processing a large number of applications resulting from the transfer of responsibility for the regulation of consumer credit from the OFT.  We suspect that this is not the last time where a small consumer credit business will come a cropper.