Financial Conduct Authority v X and Y (2017)

X and Y were founding partners of a firm authorised by the FCA to provide personal investment advice.

Following action taken by the Financial Conduct Authority in May 2011 over mis-selling of geared traded endowment policies (GTEP products) the firm became insolvent and entered bankruptcy.

The firm (and therefore X and Y as partners with unlimited liability in the firm) had significant liabilities arising from numerous valid claims filed with the Financial Ombudsman Service relating to the advice offered on GTEP sales.

In late 2011, a Trustee was appointed to establish the value of X and Y’s assets and liabilities, so an assessment could be made which would allow them to pay creditors.  

X and Y made inadequate, incomplete and misleading disclosures to the Trustee about their financial situation in order to avoid the Trustee inquiring into, and potentially recovering, assets for the benefit of their creditors. 

After protracted proceedings, the FCA banned X and Y from working in financial services for integrity failings. Additionally Y was fined £50,000 for attempting to mislead the FCA during a FCA interview.

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