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IFSAT THE IRISH FINANCIAL SERVICES APPEALS TRIBUNAL THE FINANCIAL SERVICES REGULATORY AUTHORITY Appeals Tribunal: Decision: The Chartered Accountants on behalf of the above named Appellant applied to the Irish Financial Services Regulatory Authority (the Financial Regulator) for a Money Lenders Licence or, as it is more commonly called, the renewal of a Money Lenders Licence, under the Consumer Credit Act 1995 as amended. The Financial Regulator refused that application. The Appellant appealed that decision to the Irish Financial Services Appeals Tribunal (the Appeals Tribunal). It is accepted that Mr X now plays a dominant role in the affairs of the Appellant. Previously In June 2007 Mr X who had pleaded guilty was convicted on four counts of indecent assault on a male more than twenty years ago and received a sentence of two years suspended on condition that he entered into a bond of good behaviour. That bond was duly entered into and expired recently. In addition, Mr X was made subject to the requirements of Part Two of the Sexual Offenders Act 2001 (commonly referred to as being "entered on the sex offenders register") for a period of five years which will expire about 2012. Civil proceedings were instituted by the victim against Mr X and were settled on terms that a sum of €150,000 was paid to the victim in settlement of his claim for damages and costs. The Consumer Credit Act 1995 Section 93(10) as amended by the Central Bank and Financial Services Authority of Ireland Act 2003 (the 2003 Act) provides that an application for a money lenders licence may be refused by the Regulatory Authority on one or more of the following grounds:- "a) The Applicant or any business with which he was connected, was, during the previous five years, convicted of an offence for contravening Section 98,
in respect of himself or of his business,
management of his business in relation to money lending is by Order of a court disqualified from holding a licence
and proper person to carry on the business of money lending,
It is also material to note that in pursuance to Section 93(1) the moneylender's licence may be granted "upon such terms and conditions" as the Regulatory Authority sees fit to impose. The Financial Regulator accepted that the Appellant had fully complied with all of the specific provisions of the Consumer Credit Act 1995 (as amended). In addition, the Appellant contended, and furnished convincing evidence in support of his contention, that there were no complaints as to the manner in which the appellant company or any business with which Mr X was associated had been carried on over a long period of years. No opposition or complaint emerged as a result of the advertisement published in relation to the application under review or any prior application. Moreover it was the undisputed evidence of Mr X that the business had been carried on by him or entities associated with him with successive generations of clients in a sensitive and understanding manner. The only issue in the present case was whether the Appellant was a fit and proper person to carry on the business of money lending either subject to terms and conditions or at all. In a letter (the "minded to refuse letter") the Financial Regulator notified the Appellant that he proposed to refuse the application for the moneylenders licence on the grounds that the Appellant was not, in the Financial Regulator's opinion, "a fit and proper person to carry on the business of money lending" for the reasons set out in that letter. The Appellant was invited to make and did make representations regarding the proposed refusal. The grounds on which it was believed that the Appellant was not a fit and proper person was threefold, namely,
[In the letter from the Financial Regulator, it was stated that the period of imprisonment was two years whereas in fact it was three and furthermore a sum of €150,000 was paid in settlement of civil proceedings and not pursuant to an Order of the Circuit Court in the criminal matter. In those respects, the Financial Regulator was misled by information provided to him but this error did not materially affect the decision.]
In his response, Mr X emphasised the fact that the offence –admittedly a very serious offence – occurred more than twenty five years before the date of the application; that the loss of the licence would have a devastating financial effect on the Appellant and a very serious psychological and emotional effect on him personally. It was contended that the Judge in the criminal proceedings did not believe there was any risk of Mr X reoffending and it was in that regard reference was made to the written opinion of a consultant psychiatrist. It is important to recognise that a copy of the opinion was not then furnished to the Financial Regulator. The Financial Regulator having taken into the account the submissions on behalf of the Appellant refused to grant the licence sought. By notice dated the 18th day of June 2009, the Financial Regulator responded to the allegations contained in the notice of appeal of the Appellant. Following the exchange of further correspondence between the parties and the Registrar of the Appeals Tribunal, a preliminary hearing was held on the 7th day of July 2009. In the course of that hearing it emerged that the Financial Regulator was anxious to obtain further particulars of allegations by the Appellant that it had failed to take into account material evidence and had taken into account inadmissible evidence. The Appellant, for its part, was anxious to obtain discovery or copies of certain documents in possession of the Financial Regulator. These procedural problems were resolved between the parties under the supervision of the Appeals Tribunal. The issues identified by the Appeals Tribunal are twofold, namely,
An additional and important procedural matter determined at the preliminary hearing was a direction – in accordance with the emerging procedure of the Tribunal – that each party should deliver to the Registrar for transmission to the other party of a proof of the evidence of the witnesses whom it was intended to call at the plenary hearing. In addition, the Appeals Tribunal directed that the proceedings at that stage should be heard in private but that the parties should be afforded an opportunity to make written and oral submissions as to the form which the proceedings should take. The plenary proceedings were heard on the 24th day of July. 2009. The first issue addressed at that hearing was the form of the proceedings. The manner in which proceedings are to be heard by the Appeals Tribunal is governed by Section 57W Part VIIA inserted in the Central Bank Act 1940 by Section 28 of the 2003 Act. That Section provides as follows: "57W. –(1) The hearing of an appeal is to be open to the public, unless the parties to the hearing agree that it should be conducted in private.
It appears from the Certificate of Conviction that the Trial Judge expressly prohibited the "publication of any of the identities of the parties involved". The Appeals Tribunal infers that the Trial Judge intended that publicity should be limited to protect the identity of the innocent victim. The members of the Appeals Tribunal believe that they should exercise the powers available to them to ensure that this confidentiality continues to be preserved. Apart from the protection of the victim, the Appeals Tribunal is of the view that the publication of evidence or material which might identify the Appellant or any of its associates could operate as a serious injustice. The Appellant contends – and the Financial Regulator accepts – that the publication of the conviction of Mr X would be extremely damaging to the financial affairs of the appellant company. Indeed it is doubtful whether it could survive such disclosure. It would seem unrealistic to invite the Financial Regulator to reconsider its decision to grant a moneylenders licence if the procedure under which such recommendation was made rendered the granting of such a licence irrelevant. This, in the opinion of the Tribunal, constitutes a sufficient reason to exercise the powers conferred by subsection (2) aforesaid. In those circumstances, the Appeals Tribunal directed that the proceedings before it be held in private – as had been the case – and that no information in relation to the evidence or documentation or the location in which the business of the Appellant is conducted or the identity or address of their legal advisors should be disclosed in any publication. This restriction will not prevent the publication by the Financial Regulator and other interested parties of the legal principles investigated by the Appeals Tribunal and any principles of law determined by it subject to appropriate redaction. "This is a portmanteau expression widely used in many contexts. It does not lend itself to semantics exegesis or paraphrase and it takes its colour from the context in which it is used. It is an expression directed to ensuring that an applicant for permission to do something has the personal qualities and professional qualifications reasonably required of a person doing whatever it is that the applicant seeks permission to do". This Appeals Tribunal accepts that the comment aforesaid outlines the proper approach to the meaning and application of the crucial expression in the present case. The opinion of the Financial Regulator that an applicant is not a fit and proper person to carry on the business of money lending is one of eight or more grounds on which an application for the licence may be refused. All of the other grounds are directed in express terms to commercial matters impinging on the business of money lending. The first possible ground for refusal is contained in Paragraph (a) of the Consumer Credit Act 1995 Section 93(10) and permits refusal where the applicant or any business with which he was connected was "during the previous five years" convicted of an offence for contravening Section 98. As Section 98 prohibits the carrying on of the business of moneylender by a person who is not the holder of a moneylender's licence it might be inferred that an offence under that section would be the most serious impediment to obtaining a valid licence. The fact that the relevant paragraph limits the operation of the restriction to a five year period, is also of significance. If a conviction going to the root of the money lending business obtained more than five years before the operative date is not a ground for refusing an application there must be considerable doubt whether a conviction for any other type of offence, however serious or scandalous, whether obtained inside or outside the five year period, would be a ground for refusal. The Financial Regulator has explained that the expertise available to it is primarily financial and legal and does not extend to the consideration or evaluation of psychiatric reports. This might suggest that the determination of whether an applicant is a "fit and proper person" should not be determined by reference to the existence or continuance of the propensities which may have existed at the time when an offence of sexual abuse was perpetrated by applicant. The Appellant did not seek to rely on any such argument. On his behalf, it was accepted that any significant danger to the public should be taken into account in granting or refusing a money lenders licence. The Appeals Tribunal takes the view that Mr X more than twenty five years before the application committed an offence under Section 61 of the Offences against the Person Act would not of itself be a ground for refusing a money lenders licence but it is of the view that the Financial Regulator would properly have regard to the fact that the granting of a money lenders licence might afford an opportunity to any person who had a propensity to abuse children to repeat that offence. It is clear that the Consumer Protection Code in processing the application and Ms Mary O'Dea, the Consumer Director, in refusing the application paid particular attention to any possible propensity of Mr. X concerned and in particular had regard to the fact that the very nature of money lending as defined in the Consumer Credit Act 1995 involved visiting the homes of customers. In having regard to that fact, clearly the persons concerned were bringing to bear general information in relation to sexual abuse and the propensities of abusers which have emerged in recent years. It would not be reasonable to rely on that class of information without taking into account the opinion of relevant experts where available. The opinion of the Consultant Psychiatrist which was obtained for the purposes of the proceedings against Mr X was not furnished to the Financial Regulator until after the commencement of the appeal herein and the crucial evidence of Mr. X of his response to the advice of his Psychiatrist was not known until the plenary hearing. The Appeals Tribunal was impressed by the balanced report of the Consultant Psychiatrist. The conclusion of the Psychiatrist was that it was most unlikely that his patient would offend again. However having said that, the Psychiatrist did say he had some anxiety about Mr X. His concern was that Mr. X was unable to face the consequences of his actions. The Psychiatrist was anxious that Mr X should consider a referral to the Grenada Institute in Dublin or to a Psychotherapist whom he named. It was a matter of concern to the Appeals Tribunal that Mr X did not appear to have implemented this advice. In the course of his evidence to the Tribunal, Mr X did explain that he had attempted to contact the Psychotherapist recommended by the Psychiatrist but that he was not available at the time. At that stage the matter was not pursued because Mr X felt that he was not in need of further treatment. However, at the hearing Mr X undertook to consult with the Psychotherapist or such other medical advisors as might be recommended by the consultant psychiatrist, and to take whatever treatment might be recommended for him. In addition, Mr X undertook to instruct the Psychotherapist or other medical advisor to notify his Solicitors that he had sought advice and was undertaking any recommended procedures. In turn, the Solicitor was authorised to communicate that report to the Financial Regulator. The Appeals Tribunal appreciates – as the Consultant Psychiatrist pointed out in the second report – that it would be imprudent to give ready access to children to anyone who had at any time displayed a propensity to sexually abuse young people or to facilitate or authorise such access. However the Appeals Tribunal does not believe that the collection of money by or on behalf of a money lender from the homes of adult customers would create any such danger. The commercial transaction between the moneylender and his client might be trusting and friendly but there is no reason to believe that the collector would have access to children which would be comparable to that of the doctor, priest or relative who would enjoy the respect and confidence of the household and be permitted free and unsupervised access to all of the family. Indeed it is unlikely that a Borrower would wish his financial affairs to be known to his or her children. Having considered the reports of the Consultant Psychiatrist, the undertaking given to the Appeals Tribunal by Mr X and the nature of the relationship between the person collecting on behalf of the moneylender and the householder upon whom he calls, the Appeals Tribunal believes that there would be no justification for any realistic concern that Mr X would molest the children of any client of the moneylender. It is in those circumstances that the Appeals Tribunal has determined that the matter should be remitted to the Financial Regulator with a recommendation that he should consider or reconsider the foregoing facts in the light of all the other evidence. As previously indicated, the Appeals Tribunal will entertain in the first instance written submissions by the parties in relation to the matter of costs. In addition it may be necessary to give consideration as to how the Financial Regulator will deal with any procedural problems which may arise having regard to the fact that the period for which the licence was sought has now expired. In the meantime the Appeals Tribunal will direct that the appeal fee of €5,000 lodged by the Appellant be refunded to their Solicitors. The Appeals Tribunal directed that each of the Parties bear their own costs of the proceedings. Note: The Financial Regulator, having reconsidered the application in the light of the Decision of the Appeals Tribunal, granted a Moneylender's Licence to the Applicant. |
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