The Financial Services and Markets Tribunal has upheld a Financial Services Authority (FSA) case against solicitor Allen Phillip Elliot after finding he is not fit and proper to work in the regulated financial services industry.
The Tribunal says Elliot’s history shows “he is not able and willing to comply with requirements placed upon him by professional rules and obligations” and he was not open and honest in his dealings with regulators.
It adds Elliot “poses a risk to the protection of consumers and a risk to the reputation of the market” and concludes a Prohibition Order is necessary “in order to protect consumers from risk and…to maintain market confidence”.
Elliot is not authorised by the FSA but he operates an unregulated mortgage investment scheme through his company FMD Trustees. He obtains client referrals and introductions from authorised financial advisers who the Tribunal says may be unaware of his history.
The Tribunal has based its decision of the findings of the Solicitors Disciplinary Tribunal (SDT), which in 2002 struck Elliot off the Roll of Solicitors for misconduct primarily arising from his operation of a previous mortgage investment scheme.
The SDT found Elliot had acted in a systematically dishonest manner, involving secret profit and fees adding up to hundreds of thousands of pounds over a period of three years, which were not properly disclosed to clients.
Further, the SDT found marketing information was misleading and Elliot had neither assessed the suitability of the investment recommended for clients’ particular circumstances nor taken reasonable steps to ensure his investor clients understood the nature of the risks involved in his investment scheme.
This is the first FSA case in which the Tribunal has based its decision on the findings of another disciplinary tribunal, and it sets a precedent for the FSA so it can rely on the conclusions of other courts and tribunals when considering whether individuals are fit and proper to undertake regulated activities.
Prior to the SDT decision, Elliot qualified as a solicitor in Queensland, Australia and in 1988 he was found guilty of unprofessional conduct in connection with mortgage-related investment and financial business which he carried on as a solicitor.
In the early 1990s his business failed and Elliot entered into an arrangement with his creditors but he did not comply with the terms of the arrangement and was declared bankrupt in 1995, with losses eventually exceeding Australian $3m.
He then came to the UK and, failing to declare he was an undischarged bankrupt in Australia, was admitted to the Roll of Solicitors for England and Wales.
He entered into private practice as a solicitor but his business consisted almost exclusively of promoting and operating a mortgage investment scheme known as the First Mortgage Debenture (FMD) Monthly Income Plan.
The current scheme, which Elliot operates through his company FMD Trustees, is also called the FMD Monthly Income Plan, but this is a different mortgage investment scheme to the one in which Elliot operated as a solicitor.
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