Hussain v Financial Services Authority [2007] UKFSM FSM051 (23 November 2007)

REGULATED ACTIVITIES — own-initiative variation of permission —
supervisory notice varying a Part IV permission by removing all regulated
activities with immediate effect — failure by applicant to disclose convictions
for dishonesty when making application — failure to disclose further conviction
for dishonesty occurring after permission granted — applicant communicating
with Authority in abusive, insulting and threatening terms — applicant’s
refusal to comply with notice despite failing in application to Tribunal to have it
suspended — refusal to submit final RMAR — failure to notify clients of
withdrawal of permissions — whether fit and proper person — no —
supervisory notice correct action for Authority to take — reference dismissed

THE FINANCIAL SERVICES AND MARKETS TRIBUNAL

QAMAR HUSSAIN
trading as RADIANT TECHNOLOGICAL SERVICES

Applicant

and

THE FINANCIAL SERVICES AUTHORITY

Respondent

Tribunal: Colin Bishopp (Chairman)
Sandi O’Neill
Andrew Lund

Sitting in public in Nottingham on 23 November 2007

The Applicant in person

Dan Enraght-Moony for the Respondent

DECISION

1. On 5 November 2004 the applicant, Qamar Hussain, applied to the
Authority for permission within the terms of Part IV of the Financial Services and
Markets Act 2000 to conduct mortgage and general insurance activities. He
submitted one application, a Firm Application Form or FAF, for the authorisation
of his firm and a second, an Approved Persons and Individual Controllers Form or
APICF, seeking his own approval. Both applications were granted, on 1
December 2004, and Mr Hussain began to undertake the authorised activities as a
sole trader from about that date, using the name Radiant Technological Services.

2. On 22 May 2007 the Authority sent to Mr Hussain a First Supervisory
Notice, withdrawing the permissions which had been granted in 2004 with
immediate effect. It was a requirement of the Notice that Mr Hussain should write
to his clients informing them that he was no longer permitted to carry on regulated
activities. Mr Hussain did not make representations to the Authority, but instead
immediately referred the Notice to the tribunal, applying at the same time for
directions that the effect of the Notice be suspended and that the tribunal's register
contain no particulars of the reference. The application came before the President
of the tribunal on 29 June 2007 and was refused.

3. The Authority also served a Warning Notice on Mr Hussain, with the First
Supervisory Notice. The Notice warned him that, since he would no longer be
permitted to carry on any regulated activity, his permission was to be cancelled.
Again, Mr Hussain did not take the opportunity of making representations and on
10 July 2007 the Authority issued a Decision Notice putting the Warning Notice
into effect. On 11 July 2007 Mr Hussain referred that Notice, too, to the tribunal.
The two references were subsequently joined, and the joined reference came
before us on 23 November 2007, when Mr Hussain represented himself and the
Authority was represented by Mr Dan Enraght-Moony of its own staff.

4. The Authority's reasons for issuing the First Supervisory Notice, as they
were set out in the Notice itself, were, first, that Mr Hussain had failed to disclose,
in each of the applications for permission he had submitted, that on 18 September
1985 he had been convicted at Leek Magistrates' Court of offences of theft and
criminal damage, that on 25 October 1985 he had been convicted at North
Staffordshire Magistrates' Court of theft, and that on 4 February 1987 he had been
convicted, also at North Staffordshire Magistrates' Court, of possessing an
offensive weapon in a public place and, second, that he had failed to inform the
Authority of two convictions recorded against him after his authorisation was
granted, that is on 5 December 2005 at Nottingham Magistrates' Court of theft,
two counts of assault and failure to provide a non-intimate sample for the purpose
of testing for the presence of drugs, and on 10 April 2006, also at Nottingham
Magistrates' Court, of failing to comply with the terms of the community order
imposed on him following his conviction on 5 December 2005.

5. About two months before the First Supervisory Notice was sent to him,
when Mr Hussain learnt that the Authority was contemplating issuing it, he began
a course of correspondence with the Authority. At first his letters and emails were
in temperate, indeed conciliatory terms, but once it became clear that the
Authority was in earnest, the tone of Mr Hussain's communications deteriorated:

he made a number of threats, was abusive to members of the Authority's staff, and
made accusations of racism. He discovered that the Authority had learnt of his
convictions from an informant, whose identity he tried to persuade the Authority
to divulge. The Authority refused to do so, and Mr Hussain's application for a
direction compelling it to disclose the informant's identity was rejected by the
tribunal on 29 June 2007, with his other applications which we have mentioned.

6. During the course of his correspondence with the Authority Mr Hussain did
not deny the fact of his convictions. He argued that the 1985 convictions had
occurred many years previously when he was a young man, aged only 20, that
they were no more than an indication of youthful indiscretion, that he had already
been penalised for them and that he should not be penalised again. There is merit
in all of those points but it is not the fact of the convictions, but Mr Hussain's
failure to disclose them, which is at the heart of the Authority's first disputed
decision. It relies on the statement in both FAF and APICF that convictions for
dishonesty must be disclosed, including those spent since, by virtue of art 3 of the
Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (SI 1975/1023) the
1974 Act does not allow an applicant to withhold spent convictions when seeking
authorisation by the Authority, and upon the warning in the forms that failure to
disclose relevant information could have serious consequences for an applicant.
Both of the forms ask whether the firm or the individual applicant has any
conviction for dishonesty, and in each case Mr Hussain answered "no". He also
stated that he had read and understood the declaration at the end of each form that
the information contained in it was accurate and complete to the best of his
knowledge.

7. At the hearing, Mr Hussain told us that he had not realised that he had been
convicted on the first occasion on which he had appeared at the magistrates' court.
He had a clear recollection of the event which led to his appearance there when,
he said, he had been acting as the driver for a group of friends, some of whom had
had too much to drink, who had, unknown to him, stolen a canful of petrol,
evidently siphoning it from a car and damaging the filler cap in the process, and
leaving the can in Mr Hussain's car where the police later found it. He told us he
had been advised by a duty solicitor whom he had instructed to plead guilty on his
behalf, since he wanted to have the matter concluded without delay, and that his
father had paid the fine and compensation for him. We are unable to accept that
Mr Hussain did not realise that he had been convicted of the offences. He is, as
was obvious at the hearing, an intelligent and articulate man who (as he also told
us) has undertaken a college course. It is not credible that he did not understand
that his plea of guilty to the charges would inevitably result in his conviction. We
are satisfied that he chose not to disclose it in his applications.

8. Although Mr Hussain had not done so in the course of his correspondence
with the Authority, at the hearing he told us he could not remember the second
recorded appearance before the magistrates, on 25 October 1985, and thought that
the certificate of conviction obtained by the Authority from the magistrates' court
might relate to another person of the same name. We reject that contention. Not
only the name but also the recorded date of birth of the convicted person matches
Mr Hussain's. Had there truly been any doubt about the identity of the person
concerned Mr Hussain could easily have made the point in his correspondence,

but he did not. We had a transcript of the earlier, interim, hearing when that
conviction was discussed and when Mr Hussain made no suggestion that he was
not the person convicted. We are satisfied that Mr Hussain chose to conceal this
conviction from the Authority, and that he attempted to deflect us from that
conclusion by the pretence that he was not the person concerned.

9. Although the third conviction, of carrying an offensive weapon, was
mentioned in the First Supervisory Notice, the Authority did not rely on it at the
hearing (as it was not an offence of dishonesty) and it is not necessary for us to
say any more about it.

10. Mr Hussain told us that the conviction in September 2005 occurred at a time
when he was under considerable stress, because of a number of unfortunate events
within his family and because he was also working very hard in order to establish
his business. Those events appear to have begun with a very unpleasant and
frightening experience in 2001 when, as a letter from the local police which he
produced showed, Mr Hussain was the victim of a serious criminal offence. That
episode, from which he had still not recovered, and the subsequent events resulted
in his having what he described as a breakdown which led, he said, to his
committing the offences and to his being admitted to a psychiatric hospital,
although we also learnt that he had been admitted for only three days, as a
voluntary patient. The conviction was the result of a shoplifting incident, when he
had been stopped and resisted arrest. He was required, in consequence of his
conviction for the offences, to be supervised for 12 months and to carry out
unpaid work for 150 hours. We understood that Mr Hussain's further appearance
before the magistrates followed his failure to attend for the required supervision.

11. Mr Hussain sought to excuse his failure to inform the Authority of these
convictions by telling us that he had always intended to do so, but had many other
matters on his mind, and that he had not found the time to inform it before the
Authority advised him that it had found out about them by other means. We are
not satisfied that the explanation offered is truthful. Some 18 months had gone by
when Mr Hussain discovered that the Authority had been told of the September
2005 conviction. It is impossible to accept that such a delay was attributable to
pressure of work and similar factors. Rather, we consider that Mr Hussain failed
to disclose these convictions for the same reason that he did not disclose the
others, that he thought the Authority would not find out about them if he said
nothing. We are, therefore, satisfied that this was another episode of knowing
concealment.

12. At the hearing Mr Hussain accepted unreservedly that the tone of his
correspondence with the Authority and the threats and insults contained in it were
wholly unacceptable, and he apologised. For that he deserves some credit.
However, this is not a case in which an aggrieved person, in the heat of the
moment, has made one or two misguided remarks of which he has immediately
thought better. The insults were personal, of a kind calculated to be offensive,
sometimes obscene, and repeated, some only a short time before the hearing of his
reference. The threats were directed not only at the Authority but also at named
individuals, and they too were repeated—indeed, it could fairly be said that for
several months Mr Hussain bombarded the Authority and its staff with threats and

insults. It was a sustained campaign on his part, and it cannot be excused by an
apology, however sincere. Moreover, Mr Hussain refused to withdraw one of his
accusations, that the Authority and at least some of its staff were motivated by
racism, yet there is no evidence (and Mr Hussain did not attempt to point us to
any) of such motivation.

13. We recognise—it was, indeed, obvious—that Mr Hussain strongly suspects
that the informant we have mentioned approached the Authority for some spiteful
reason. That may be true; we do not know the identity of the informant, and have
no means of knowing his or her reasons. But (as was pointed out to Mr Hussain
by the President of the tribunal, at the interim hearing) the informant's identity
and motives are irrelevant. The Authority must make its decisions, and this
tribunal must direct it to act, on the basis of the facts as they are, regardless of the
source of the information.

14. The Authority's position is that Mr Hussain's correspondence reveals an
attitude contemptuous of it, that no regulator should be treated with contempt by
those whom it is appointed to regulate, and that Mr Hussain's sustained campaign
of insults and threats is evidence, as is his failure to disclose his convictions, that
he is not fit and proper to remain an authorised person.

15. The Authority also relies on Mr Hussain's refusal to complete his Retail
Mediation Activities Return, or RMAR, for the period to 31 March 2007, and pay
the prescribed fee, and on his failure to comply with the terms of the First
Supervisory Notice. The RMAR, by which regulated firms provide information
about such matters as their financial resources and insurance cover, was due by
not later than 16 May 2007. The effect of the First Supervisory Notice was that
Mr Hussain must cease carrying on regulated activities but he did not do so, even
after his application for suspension of the effect of the notice failed. He was
required also to write to his clients informing them of his loss of his permissions,
but again has not done so.

16. Mr Hussain's explanation for his (admitted) failure to submit the RMAR
was that it was necessary to instruct his accountants to complete the form, and that
he could ill afford their fees and the fee payable to an authority with which he was
in dispute and which was attempting to deprive him of his livelihood. He told us
that although he had stated on many of his letters and emails to the Authority that
he was still trading, he had in fact been carrying on only unregulated business. He
did not deny that he had not written to his clients, and offered no explanation or
justification of that failure. He indicated, in one of his submissions to the tribunal,
that he was willing to do so but only if the Authority met the cost.

17. Although Mr Hussain's RMAR was late by only six days when the First
Supervisory Notice was served, and the other failings on which the Authority
relies post-date it, these (and the continuation of Mr Hussain's offensive
correspondence) are matters which the tribunal should take into account when
reaching a decision: see section 133(3) of the Financial Services and Markets Act
2000. The failure to submit the RMAR, at first sight, seems to be a relatively
minor fault; but we accept Mr Enraght-Moony's point that, in a regulatory system
which relies heavily on open and honest disclosure by those regulated, a
prolonged and, as we find it to be, defiant refusal to submit the RMAR is a serious

matter. An applicant seriously attempting to demonstrate that the Authority was in
error in concluding that he was not a fit and proper person would take care to
submit it, despite the cost. We also do not accept Mr Hussain's claim that he has
been carrying on only unregulated activities and not advising clients. His
statements in the correspondence are written in terms designed to indicate to the
Authority that, in defiance of the First Supervisory Notice, he was still calling
himself an IF A and carrying on business regardless and his firm's website, which
we viewed at Mr Hussain's request, clearly shows that regulated services are
offered. Mr Hussain's failure to write to his clients is of the same, defiant,
character; we do not consider his offer to do so at the Authority's cost is one it
could possibly have accepted.

18. We are in no doubt that the Authority was right to conclude that Mr Hussain
is not a person who is fit and proper to carry on regulated activities. We are
satisfied, as we have indicated, that he knowingly failed to disclose his
convictions. His wilful failure to comply with the First Supervisory Notice, even
after the rejection of his application for suspension of its effect, is impossible to
excuse. The tone of his correspondence with the Authority reveals a fundamental
failure to understand the Authority's role as a regulator, and of his obligation, as
an approved person, to comply with the terms of the Act, the relevant regulations
and the Handbook. Complete candour and scrupulous compliance with the
requirements which apply to him are, properly, demanded of any approved
person, and anyone who falls below that standard cannot be regarded as fit and
proper.

19. It may be, as Mr Hussain insisted, that he is still suffering the after-effects
of the incident in 2001 and of the other family events he mentioned, but we cannot
disregard the fact that he chose to apply, in 2004, for permission to carry on
regulated activities. Any person who seeks the privilege of such authorisation
must necessarily place himself within the regulatory regime. One of the main
purposes of the regime is the protection of the public. If that purpose is to be
achieved, those providing regulated services must demonstrate a high standard of
openness, honesty and integrity. That standard is an absolute one; it cannot be
varied to take account of an applicant's personal circumstances. Mr Hussain has
failed to demonstrate that he meets the standard. Moreover, the tone of his
correspondence with the Authority, despite his apology, gives us little confidence
that, even now, he fully comprehends the importance the 2000 Act attaches to the
Authority's regulatory position.

20. It is also impossible to argue, as Mr Hussain did, that the Authority should
investigate every application thoroughly before granting or rejecting it. It may be
that the Authority would have rejected Mr Hussain's applications had it checked
at the time whether he had any convictions, and that, if it had been rejected, he
would not have incurred the cost of starting up his business. But the argument
misses the point. First, even if it had the resources to do as Mr Hussain suggested
within a reasonable time-scale, the Authority, as well as the public whose task it is
to protect, is entitled to rely on the obligation placed on applicants to make full
and frank disclosure, as explicitly required by the forms Mr Hussain completed—
FAF and APICF. Applicants cannot wait to be found out and hope they are not.
Second, Mr Hussain's argument does not address his failure to disclose his

convictions in 2005 and 2006. If he truly thought the Authority made enquiries
into applicants and, impliedly, approved persons, it is difficult to understand why
he did not disclose convictions of which, on this hypothesis, the Authority would
soon learn.

21. Mr Hussain's challenge to the First Supervisory Notice, therefore fails, and
we direct the Authority that it should remain in effect. The second reference,
relating to the cancellation of his permission, must necessarily fail: see section
45(3) of the 2000 Act, which requires the Authority to cancel the permission if the
authorised person to whom it relates is no longer permitted to carry on regulated
activities, and the Authority is satisfied (as in this case it inevitably must be) that
the retention of the permission is not necessary.

22. The references are, therefore, dismissed. This decision is unanimous.

COLIN BISHOPP
Chairman

FIN/2007/0006 & 0010

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	United Kingdom Financial Services and Markets Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom Financial Services and Markets Tribunals Decisions >> Hussain v Financial Services Authority [2007] UKFSM FSM051 (23 November 2007) URL: http://www.bailii.org/uk/cases/UKFSM/2007/FSM051.html Cite as: [2007] UKFSM FSM051, [2007] UKFSM FSM51



	convictions in 2005 and 2006. If he truly thought the Authority made enquiries into applicants and, impliedly, approved persons, it is difficult to understand why he did not disclose convictions of which, on this hypothesis, the Authority would soon learn. 21. Mr Hussain's challenge to the First Supervisory Notice, therefore fails, and we direct the Authority that it should remain in effect. The second reference, relating to the cancellation of his permission, must necessarily fail: see section 45(3) of the 2000 Act, which requires the Authority to cancel the permission if the authorised person to whom it relates is no longer permitted to carry on regulated activities, and the Authority is satisfied (as in this case it inevitably must be) that the retention of the permission is not necessary. 22. The references are, therefore, dismissed. This decision is unanimous.

	COLIN BISHOPP Chairman FIN/2007/0006 & 0010

	6

United Kingdom Financial Services and Markets Tribunals Decisions