The Financial Conduct Authority (FCA) has banned Darren Lee Newton from working in any regulated activity in the financial services sector after finding he used customers’ money to purchase debt management firm, First Step Finance.
The FCA said this showed a serious lack of honesty and integrity and therefore he is not a fit and proper person.
Newton is disputing the regulator’s decision and has referred the matter to the Upper Tribunal at which the FCA and Newton will be able to present cases.
Newton purchased First Step through his company from Christine Whitehurst and, between 18 October 2013 and 28 May 2014, was the sole director of First Step and a director of another debt management company, Debt Help and Advice.
Newton funded the purchase of First Step from the accounts of First Step with client money, rather than his own funds. He directed or allowed £322,500 to be transferred from the First Step accounts to Mrs Whitehurst.
Whitehurst and her husband, Adrian Whitehurst, were banned by the FCA in October 2017 for dishonestly misappropriating money from First Step.
The FCA considered that Newton knew the money from First Step should only have been used to pay customers’ creditors or to be returned to customers and they were paid to Mrs Whitehurst when First Step had a significant client money shortfall in its accounts of over £6m.
The firm went into administration on 28 May 2014 with a client money shortfall of £7.16m from over 4,000 customers.
First Step was a debt management firm offering a debt reduction service to its customers. First Step collected and held client monies before making full and final settlement offers to customers’ creditors.
After the purchase of First Step on 18 October 2013 customers were meant to be transferred to Debt Help and Advice, from that date.
However, the transfer of customers did not take place. First Step continued to receive payments from existing clients until it was placed into administration in May 2014.