Mr Markos Markou v Financial Conduct Authority [2023] UKUT 00101 (TCC
| Jurisdiction | UK Non-devolved |
| Subject Matter | 27 April 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 28 April 2023 |
UT Neutral citation number: [2023] UKUT 00101 (TCC)
UT (Tax & Chancery) Reference Number: UT-2021-000025
Upper Tribunal (Tax and Chancery Chamber)
Hearing venue: The Rolls Building, London EC4A 1NL
Sitting in public on 7-11 November 2022
Judgment given on 27 April 2023
Before
JUDGE RUPERT JONES
MEMBER JO NEILL
Between
MR MARKOS MARKOU
Applicant
and
THE FINANCIAL CONDUCT AUTHORITY
The Authority
Representation:
Ian Rees Phillips, counsel for the Applicant
Edward Brown KC, instructed by the Financial Conduct Authority
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DECISION
Introduction
1. This is our decision in respect of a Reference Notice dated 22 February 2021 (the
“Reference”) made to the Upper Tribunal by the Applicant (Mr Markos Markou). The
Reference is in respect of a Decision Notice (the “Decision Notice”) issued by the
Financial Conduct Authority (“the Authority”) on 29 January 2021.
2. In these proceedings, the Authority’s overarching case is that the Applicant had
personal responsibility for maintaining a compliant regulated mortgage business at
Financial Solutions (Euro) Limited (“FSE”) at all times in the Relevant Period, but that
he failed to do so. The Authority argues that by ignoring the risks that he knew his
conduct created, the Applicant acted recklessly and demonstrated a lack of integrity.
The Applicant denies that he failed to maintain a compliant mortgage business within
FSE and denies that he acted recklessly or lacks integrity.
The Decision referred
3. By the Decision Notice dated 29 January 2021, the Authority decided to:
(i) impose on the Applicant, pursuant to section 66 of the Financial Services and
Markets Act 2000 (“the Act”), a financial penalty of £25,000;
(ii) withdraw, pursuant to section 63 of the Act, the Applicant’s approval given by
the Authority under section 59 of the Act to perform the SMF1 (Director) and
SMF3 (Chief Executive) controlled functions at FSE; and
(iii) make an order, pursuant to section 56 of the Act, prohibiting the Applicant from
performing any function in relation to any regulated activity carried on by an
authorised person, exempt person or exempt professional firm.
4. The Decision Notice recorded the Authority’s decision and findings in relation to the
Applicant’s conduct in the period from 24 November 2015 to 14 October 2017 (“the
Relevant Period”).
Overview of the Authority’s case
5. The precise subject matter of the Decision Notice is explored below but it included the
following findings which the Authority continues to rely upon as allegations in this
Reference.
6. The Authority decided that the Applicant did not have the necessary appropriate
oversight of FSE’s regulated mortgage business. This was demonstrated by his
reckless: a) failure to implement policies to combat mortgage fraud; b) failure to
properly supervise his mortgage advisors; and c) failure to take sufficient steps to
prevent FSE from transacting mortgage business between 10 July 2017 and 14 October
2017, during which period he was aware that FSE did not have professional indemnity
insurance (“PII”).
7. The Authority concluded that the Applicant’s conduct placed FSE at risk of being used
as a vehicle for financial crime and did not appropriately protect the interests of
consumers.
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8. In its Decision Notice the Authority found, and in this Reference it alleges, that the
Applicant:
(i) failed to comply with Statement of Principle 1 (acting with integrity) in the
Authority’s Statements of Principle and Code of Practice for Approved Persons
part of the Handbook;
(ii) is not a fit and proper person to perform the SMF1 (Director) and SMF3 (Chief
Executive) controlled functions at FSE; and
(iii) is not a fit and proper person to perform any function in relation to any regulated
activity carried on by an authorised person, exempt person or exempt
professional firm.
9. In these proceedings, the Authority relies on five grounds on which the Applicant is
said to have misconducted the mortgage business of FSE during the Relevant Period.
These were developed in the Authority’s skeleton argument for the hearing and
paragraphs 3, 12.1-12.5 and 67 of its Statement of Case dated 24 March 2021. It is said
that the Applicant recklessly:
(i) Failed to establish, maintain and enforce effective financial crime systems and
controls, particularly in relation to the detection and prevention of mortgage
fraud;
(ii) Failed to establish and practise an appropriate level of oversight and monitoring
of FSE’s mortgage advisors, particularly in relation to the detection and
prevention of mortgage fraud;
(iii) Failed to ensure that FSE’s mortgage advisors did not carry on regulated
mortgage business without PII in place (from 11 May 2017) and beyond the
date on which the Applicant knew that FSE’s PII had lapsed (10 July 2017);
(iv) Failed to ensure that FSE’s mortgage business did not revert to previous non-
compliant practices in relation to which the Authority had previously expressed
serious concerns (the period 2011 to 2015, prior to the Relevant Period); and
(v) Failed to deal transparently with the Authority and the Upper Tribunal in
relation to the explanations given by him as to the extent of FSE’s “trading”
activity following the Authority’s supervisory visit on 9 May 2017.
Overview of the Applicant’s case
10. The Applicant’s case is that he has not acted recklessly in any manner in the conduct
of any business or regulated activity at FSE during the Relevant Period. He submits
that his actions did not lack integrity and he remains a fit and proper person to perform
all the regulated functions and activities for which he should remain approved.
11. In broad terms he contends that he maintained a compliant mortgage business at FSE
in that:
(i) he implemented, maintained and enforced, reasonable and effective policies and
procedures for FSE during the Relevant Period in relation to preventing and
detecting financial crime such as mortgage fraud;
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