A director of three debt management firms has been sentenced to 15 months in prison, suspended for two years, after being found guilty of fraud by abuse of position.
David Hall, director of Debts Reduced Limited, Linked Finance Limited, and a firm set up in his own name (together referred to below as ‘the firms’), was sentenced at Cardiff Crown Court on Friday April 8. He was also given 200 hours of community service.
The case was brought by South Wales Police following its own investigation, and with the cooperation and assistance of the Financial Conduct Authority (FCA).
The FCA said it used its regulatory powers to ensure consumers affected were fully refunded and that the firms did not take on any new business from May 2014.
The regulator provided a witness statement for the prosecution which set out its actions following allegations that Hall had acted inappropriately.
It was alleged Hall had charged customers £10 per month for an additional product which he referred to as a ‘cover plan’.
Hall claimed this product provided help to customers if their circumstances changed and they were subsequently unable to make payments into their debt management plan, and therefore to creditors.
Hall was unaware of any contractual basis on which any of the customers consented to this service. He was also unaware of any documentation or correspondence initially used to make customers aware they were paying into this service or had access to the service.
At the request of the FCA, Hall restricted his FCA permissions and agreed that the firms would cease engaging in new debt management business. The restriction took effect on May 21 2014.
Hall also agreed to the FCA’s request to wind down the firms in an orderly manner and to focus on returning money (including money accumulated as part of the cover plan) back to the relevant customers.
On February 20 2015, having been satisfied that Hall had returned the money to the relevant customers, the firms’ interim permissions were cancelled.
By Marcel LeGouais