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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Financial Conduct Authority v London Property Investments (UK) Ltd (t/a LPI Emergency Property Finance) & Ors [2024] EWHC 1276 (Ch) (24 May 2024) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2024/1276.html Cite as: [2024] EWHC 1276 (Ch) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Fetter Lane London, EC4A 1NL |
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B e f o r e :
____________________
| THE FINANCIAL CONDUCT AUTHORITY |
Claimant |
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| - and - |
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| (1) LONDON PROPERTY INVESTMENTS (U.K.) LIMITED (t/a LPI Emergency Property Finance) (2) NPI HOLDINGS LIMITED (3) TONY STEVENS (4) DANIEL STEVENS |
Defendants |
____________________
None of the Defendants appeared or was represented
Hearing dates: 11-14 March 2024
(draft judgment sent out: 20 May 2024)
____________________
Crown Copyright ©
Mr Justice Fancourt:
Introduction
i) This introduction (paras 1-16);
ii) The jurisdiction under the Act and statutory instruments made under it pursuant to which the FCA is claiming (which I can do in part by reference to the First Judgment, in which the Recorder set out the relevant statutory provisions fully and accurately) (paras 17-36);
iii) The findings made by the Recorder in the First Judgment that are relevant to the issues of liability of the Defendants in the cases of the Additional Individuals (paras 37-49);
iv) The evidence before me in relation to the 26 Additional Individuals (paras 50 59)
v) My findings in relation to the cases of those individuals (paras 60 70)
vi) The jurisdiction under the Act relating to remedies and the authorities touching on the right approach to the exercise of the statutory powers given to the court (paras 71 84)
vii) The right approach to quantum in the RMC cases (paras 85 107))
viii) The right approach to relief in the SRA cases (paras 108 145)
ix) Relief to be granted (paras 146 151)
Statutory jurisdiction relating to regulated activities under the Act
"No person may carry on a regulated activity in the United Kingdom, or purport to do so, unless he is
(a) an authorised person; or
(b) an exempt person."
"An activity is a regulated activity for the purposes of this Act if it is an activity of a specified kind which is carried on by way of business and
(a) relates to an investment of a specified kind;
"
It is therefore notable that dealing with specified investments is not a regulated activity unless it is carried on by way of business. The concept of carrying on an activity by way of business is generally widened by the terms of the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business Order) (SI 2001 No.1177) ("the CRAWB Order"), but in some relevant respects is narrowed (see the First Judgment at [27], [53], [54])
"(1) An agreement made by a person in the course of carrying on a regulated activity in contravention of the general prohibition is unenforceable against the other party.
(2) The other party is entitled to recover
(a) any money or other property paid or transferred by him under the agreement; and
(b) compensation for any loss sustained by him as a result of having parted with it.
(3) 'Agreement' means an agreement
(a) made after this section comes into force; and
(b) the making or performance of which constitutes, or is part of, the regulated activity in question."
"If the person against whom the agreement is unenforceable
(a) elects not to perform the agreement, or
(b) as a result of this section, recovers money paid or other property transferred by him under this agreement,
he must repay any money and return any other property received by him under the agreement."
The reference to "property" is to be read as the value of the property at the time of its transfer under the agreement if the property has passed to a third party.
i) For "investment property loans" and "second charge business loans", if the RMC contains a compliant declaration, the borrower is presumed or deemed to have entered into the agreement wholly or predominantly for the purpose of a business carried on by them (which is one of the criteria for such loans). There therefore needs to be a declaration in a prescribed form for the presumption to arise.
ii) The presumption is rebuttable. The deeming for an investment property loan does not apply where the borrower or a related person intends to occupy the mortgaged property as a dwelling. This is fundamental, as in each case bar one of the Additional Individuals, they intended to occupy the mortgaged property as their home. In the one exceptional case, the mortgaged property was to be occupied by the Additional Individual's son, a related person.
iii) In some cases, the consumers signed declarations that the loans were for the purposes of the business. But this is not conclusive, and in no cases was this in the prescribed form. As the Recorder found, the declaration was in any case untrue in all cases and was part of the way that LPI operated to conceal the true nature of the lending from the lender and make the lending appear to be unregulated.
iv) If it is the case that the lending is a re-mortgage by a borrower not acting for the purposes of business, where the borrower intends to live in the property, and it is secured by a first legal charge, none of the exclusions can apply. If one or more of these criteria were unsatisfied in a given case, closer scrutiny of the exclusions would be necessary.
i) Making arrangements for a person to enter into an RMC as borrower (art. 25A(1) RA Order);
ii) Making arrangements with a view to a person who participates in those arrangements entering into an RMC as borrower (art 25A(2));
iii) Advising a person as borrower or potential borrower on the merits of entering into a particular RMC (art. 53A(1));
iv) Agreeing to carry on a specified activity (art 64).
The findings in the First Judgment
The evidence in relation to the 26 Additional Individuals
a) explained the contact that the FCA had had with the Additional Individuals, the signed statements that some had prepared, attendance notes taken by FCA officers of conversations with them and/or letters written by them to the FCA or questionnaires that they had completed,
b) includes a summary of this evidence and all documentary evidence available, on an individual-by-individual basis for all 26,
c) provides evidence of activities of T Stevens after the date of the Order made by the Recorder;
d) updates the position with the known (and largely frozen) assets of the Defendants;
e) explains the approach the FCA has taken to assessing losses resulting from contraventions; and
f) then explains, individual by individual, what these losses amount to, in the different categories of transacted RMCs, attempted RMCs and SRAs.
In his statement, Mr Bulmer assesses the aggregate losses suffered by the Original and Additional Individuals at £4,367,199.89.
Findings in relation to the Additional Individuals
i) LPI's activities in relation to each Additional Individual concerned an RMC or intended RMC, within arts. 61 and 61A of the RA Order.
ii) That is because none of the exclusions, or "carve outs" in art 61A or other articles of the RA Order applies: in each case the loans were or were to be by way of re-mortgages, not purchase mortgages; they were secured or intended to be secured by first charges over the property, not second charges; and the Additional Individuals (except Mr Palitsyne) resided and/or intended to reside in the property and were not acting by way of business, despite what some documents prepared by LPI appeared to show the lenders. In the case of Mr Palitsyne, it was his son, a related person, who resided in the property, so that makes no difference to the analysis in his case.
iii) The specified activities carried on by LPI in the case of most of the Additional Individuals were all of the following:
a) arranging for RMCs to be entered into, under art. 25A(1) of the RA Order, the causation test in art. 26 being met in all cases and no such RMC being entered into (or intended to be entered into) with the benefit of advice from an authorised person (art. 29);
b) making arrangements with a view to RMCs being entered into, under art. 25A(2), with the exclusions in arts. 33 and 33A not applying in any case because the introductions from LPI were mainly to non-authorised or non-exempt brokers or lenders, and even where an authorised broker or lender was used, the introduction effected by LPI was not with a view to the provision of independent advice;
c) agreeing to arrange RMCs, under art. 64, with the agreements being made orally in the first conversation between T Stevens and the Additional Individual or at the subsequent meeting, and in most cases also in the form of signed agreements, the so-called "irrevocable fee agreement declarations", which were not a necessary part of other services provided by LPI by way of its business, within the meaning of art. 67.
iv) In the following Additional Individual cases, I am not persuaded that there were specified activities of the following types (though the findings above as to other types of specified activity do apply in each case):
a) Jean-Pierre Jacob: there was no arrangement for an RMC to be entered into, within art. 25A(1) RA Order, because no product was available for Mr Jacob, who did not pursue the matter: the causative connection was absent in this case.
b) Michael Philippou: There was no arrangement for an RMC to be entered into, within art. 25A(1), because Mr Philippou did not take matters far enough and there is no evidence that a lender was identified.
c) Mark and Zena McKay: no lender materialised because the McKays managed to sell their property shortly after LPI became involved. Matters therefore did not progress far enough for LPI to have made arrangements for an RMC to be entered into, within art.25A(1).
d) Andrew and Louise Burt: matters did not progress far enough for any RMC product to be provided to the Burts, who appear to have resolved their financial difficulties themselves. There was therefore no arrangement made by LPI for the Burts to enter into an RMC, within art.25A(1).
e) Anna Mamtsumi Sibeko: there was no progress in this case towards an RMC product being offered to Ms Sibeko, as LPI appeared happy to wait until it was in a position to sell the property itself, using powers conferred unwittingly by Ms Sibeko. There was therefore no arrangement made by LPI for Ms Sibeko to enter into an RMC within art. 25A(1).
v) In most cases, I have not been persuaded that LPI advised on RMCs, under art. 53A(1), because LPI generally referred the case to a broker, who usually provided one product to the Additional Individual on a 'take it or leave it' basis. In many cases, the Additional Individuals clearly left it to LPI to find something that would mean they could stay in their homes, without seeking or expecting advice, and in many cases they knew little about what the product was, or even how much was borrowed. In practice, many of the Additional Individuals simply delegated to LPI (who further delegated to the broker) finding a product that could keep them in their homes, having signed forms that gave LPI and its solicitors power to enter into transactions on their behalf. LPI merely forwarded onto the RMC Individual whatever the broker sent to it (and in some cases the broker communicated directly with the individual).
vi) In the following cases only, I find that advice was impliedly given by LPI on a particular RMC product, as a result of the communications directly between LPI and the individual, as explained in the first schedule to this judgment ("the Additional Individuals Schedule"):
a) Allan Toney: in this case, Mr Toney pushed back against the product that LPI presented to him, and T Stevens explained to him why it was appropriate, thereby impliedly if not expressly recommending the loan to him.
b) Jennifer Bower: in this case, LPI did impliedly advise Ms Bower to accept a product that it had specifically sourced for her.
In those cases, this advice was not a necessary part of other services provided by LPI by way of its business.
vii) LPI carried on a business of engaging in arranging RMCs and agreeing to do so, within the meaning of s.22 of the Act and art. 3A of the CRAWB Order. The business is exactly the same as that found by the Recorder in the First Judgment, and the dealings with the Additional Individuals were other examples of that business being carried on during the same period in that way, under the direction of T Stevens and D Stevens.
Jurisdiction and law relating to remedies
"(2) If on the application of the appropriate regulator or the Secretary of State the court is satisfied
(a) that any person has contravened a relevant requirement, and
(b) that there are steps which could be taken for remedying the contravention,
The court may make an order requiring that person, and any other person who appears to have been knowingly concerned in the contravention, to take such steps as the court may direct to remedy it.
.
(5) In subsection (2), references to remedying a contravention include references to mitigating its effect."
This type of order is generally known as a "remedial order". Subsection (5) clearly has the effect of widening the power that the court has to make a remedial order. The mitigation provision did not exist in the predecessor statute, the Financial Services Act 1986.
"(1) The court may, on the application of the appropriate regulator or the Secretary of State, make an order under subsection (2) if it is satisfied that a person has contravened a relevant requirement, or been knowingly concerned in the contravention of such a requirement, and
(a) that profits have accrued to him as a result of the contravention; or
(b) that one or more persons have suffered loss or been otherwise adversely affected as a result of the contravention.
(2) The court may order the person concerned to pay to the regulator concerned such sum as appears to the court to be just having regard
(a) in a case within paragraph (a) of subsection (1), to the profits appearing to the court to have accrued;
(b) in a case within paragraph (b) of that subsection, to the extent of the loss or other adverse effect;
(c) in a case within both of those paragraphs, to the profits appearing to the court to have accrued and to the extent of the loss or other adverse effect.
(3) Any amount paid to the regulator concerned in pursuance of an order under subsection (2) must be paid by it to such qualifying person or distributed by it among such qualifying persons as the court may direct.
"
This kind of order is generally known as a "restitution order", following the side note to the section, as enacted.
i) the provider must be capable of being effectively supervised by the FCA, having regard to all the circumstances,
ii) the provider must be a fit and proper person in all the circumstances, including that its affairs are conducted in an appropriate manner and that those who manage its affairs have adequate experience and skill and may be expected to act with probity, and that
iii) its business model is suitable having regard to (among other things) the interests of consumers (Sched 6, paras 2A, 2C, 2E and 2F of the Act).
i) The court has a wide discretion under both sections;
ii) The court decides the amount to be paid or what remedy is required, in its discretion;
iii) The court should consider, against the statutory purposes, what kind of remedy would be most appropriate;
iv) A remedial order is likely to be appropriate if some unwinding of a transaction is possible and required, if its harmful consequences still subsist, or if it is difficult to quantify the amount of losses;
v) A restitution order may be appropriate where the interests of consumers are concerned only with compensation, or disgorgement of profits;
vi) An order for payment should be for such sum as is just, having regard to losses caused and the amount of profits made, but additional factors may be the seriousness of the contravention, the degree of culpability and (possibly) the means of the contravenor or those knowingly concerned in the contravention.
i) In all the RMC cases where a restriction is still in place on the registered title, the appropriate remedies are a remedial order requiring removal of the restriction, which will prevent further losses and profits from arising, together with a restitution order for any fees paid to LPI or other losses incurred by the RMC Individual as a result of the contravention.
ii) In all the RMC cases where the restriction has now been removed (because either LPI paid itself out of the new loan advance and removed it, or it has extracted its fees from the consumer as the price of removal), the appropriate remedies are a restitution order for the amount of the losses suffered by each such individual.
iii) In all the SRA cases, the appropriate remedy is an order requiring the equity in the property (after discharge of Together's or LendInvest's debt and costs of sale) to be re-transferred to the consumer, but only when the property is sold by Together or LendInvest, or by NPI, and for all the rent paid by the consumer to be repaid at that time. To prevent NPI avoiding the circumstances where payment is triggered, it is suggested that there should be an order requiring NPI to sell the property if it becomes vacant, or if it becomes free from incumbrances. By that means, for so long as the SRA Individual remains in the property under the rent back arrangement, the remedial order is effectively suspended to a time in future.
iv) Alternatively, if a remedial order is considered inappropriate in the SRA cases, the FCA seeks a restitution order in a sum equal to the losses that the consumers have suffered, calculated by reference to the loss of equity at the time of the SRA transaction and a counterfactual in which the consumers were evicted by their original secured lender, incurring further costs, and then had to rehouse themselves.
The right approach in the RMC cases
The right approach in the SRA cases
(1) The FCA's case as to appropriate remedy
(2) A worked example of losses caused
(3) Problems with a remedial order to mitigate effect of SRAs
i) It will not restore to the SRA Individual ownership of their property or provide a right to continue to live in the property (ironically, only the SRA does that, until NPI or its mortgagee claims possession). It only provides for an uncertain amount of money to be paid to the SRA Individual at an uncertain date in the future.
ii) The date at which the payment will be made is very uncertain the FCA accepts that rent paid should not be repaid until the property is sold, which could therefore be significantly delayed.
iii) The machinery required in the remedial order to ensure that the payment occurs at some stage within a reasonable timescale is quite complicated. As the FCA recognises, it is necessary to impose an obligation on NPI to sell in various circumstances, some of which (e.g. the SRA Individual vacating) may be evident to them, but others of which (e.g. a remortgage by NPI) might not be.
iv) There is an obvious risk that following such an order NPI could seek to extract further equity from the property by not paying its mortgage interest, or by re-letting the property for a premium. Even without such devices, the price obtainable (and so the equity payable to the consumer) might also be affected on a sale following a re-letting to another tenant.
v) The amount of the payment would be dependent on the amount of NPI's debt secured on the property when it is sold and the costs of the sale. In some cases, the amount of the loan was less than or close to the amount of the SRA Individual's existing debt, but in other cases NPI borrowed significantly more than the amount needed to discharge those debts (see at (viii) below). If NPI pays off some of the secured debt, the proposed remedial order would give the SRA Individual the benefit of that prepayment, but it is difficult to see why that should be so. The amount of NPI's debt may also vary in future, depending on whether NPI borrows more or pays less.
vi) To avoid any abuse of the suggested order, it is clear that further restrictions would have to be added, making a remedial order more complex.
vii) The remedial order would also have to take account of the fact that in 4 of the 13 SRA cases, title has not been transferred to NPI, owing (it is assumed) to conveyancing error. When the transfer will be completed by registration is unknown. The suggested remedial order would need to cater for the possibility that NPI did not become registered, adding more complexity.
viii) The original proposal of the FCA did not take account of whether NPI contributed any of its own money to the purchase of the properties, and if so whether some of that went to discharge the SRA Individual's secured debt. In his 11th witness statement dated 13 March 2024, Mr Bulmer set out in tabular form the result of his further investigations in this respect, and the result is that in 5 cases the debt of the consumer exceeded the amount of NPI's borrowing, with the consequence that NPI did use its own funds, in part, to discharge the SRA Individual's debt. In 7 other cases, however, NPI borrowed more than that debt and so extracted further equity. An adjustment would be needed in each case, as the FCA accepted.
ix) In principle, it is illogical that the amount of the payment to the SRA Individual should depend on the equity that may exist in the property at an unknown future date, many years later than the impugned transaction. This figure depends entirely on the dealings between NPI and its mortgagee, rather than on the equity that was lost by the SRA Individual at the time of the transaction with NPI. Once it is accepted that there needs to be an adjustment for any equity purchased or extracted by NPI at the date of the transaction, it seems more appropriate to focus on the amount of equity available to the SRA Individual at that time. Indeed, it is more logical to focus on that once it is accepted that the transaction cannot be unwound by a remedial order.
x) It seems to me to be wrong in principle that the SRA Individual can recover the equity in the property and be repaid all the rent that they paid to occupy the property. Had the transaction not taken place, the SRA Individual would either have been evicted and had to pay rent for another property, as the FCA acknowledges in its alternative calculation of loss, or (less likely) they may have remortgaged with another lender, paying monthly sums to their mortgagee roughly comparable to the rent paid to NPI. While it is true that s.26(1) of the Act provides that an agreement in contravention of the general prohibition is unenforceable against the consumer, and s.26(2) states that they are entitled to recover money paid or property transferred by them, s.28(7), which must be read together with s.26(1), requires the consumer in those circumstances to make restitution of any money and property received under the agreement.
xi) Under the SRA, the SRA Individual obtained use of the property during the term of the tenancy agreement. Although the utility value of the property cannot literally be returned to NPI, its exchange value could be. It seems to me right in principle that it should be brought into account, as in no circumstances could any of the SRA Individuals have remained in the property, or occupied a different property in the counterfactual world, without paying either mortgage interest or rent. It is notable that no case is made by the FCA that the rents set under the SRAs were unreasonable in amount as rents for the properties in question.
(4) Is a restitution order appropriate instead?
i) the financial consequences of the contraventions are still incomplete, and so it is not possible to quantify precisely the losses that each SRA individuals has incurred at this stage;
ii) an order against NPI for payment of a sum of money would leave the FCA having to enforce against the assets of NPI, which include the properties that are tenanted by the SRA individuals.
(5) Decision on content of appropriate order
Relief to be granted
Allan Toney
i) Mortgaged property: 153 Milton Street, Northampton NN5 7PF. Mr Toney sole proprietor.
ii) Barclays Bank repossessed property in 2019. Mr Toney told T Stevens on telephone that he needed £50,000 to repay Barclays and spend some money on renovations. Mr Toney intended to resume occupation of his home, with a view to selling it himself later.
iii) T Stevens emailed a legal authority instruction form and a third party authority form. Although there is no signed version of these available, Mr Toney either signed versions or agreed them. He also signed a restriction entry consent form, but did not realise what he was signing.
iv) LPI registered a restriction against the property title on 14.10.19 (now removed).
v) Mr Toney unwittingly enabled LPI to change the address registered for his driving licence and a bank statement account, to show an address other than his residential property.
vi) 4Syte Finance Ltd ("4Syte") sent Mr Toney a loan approval letter in the sum of £103,480. The loan agreement contains a business purposes declaration, but this was false and was the basis on which LPI encouraged 4Syte to lend to Mr Toney. Mr Toney questioned T Stevens about the amount and was told it was the minimum amount of loan he could obtain for him. Another person, Nicola Hicks, was added as joint borrower, at T Stevens' request.
vii) Mr Toney received no advice from the solicitors who were engaged by LPI to do the conveyancing.
viii) T Stevens later told Mr Toney that the debt to Barclays had been paid off. The re-mortgage had completed and 4Syte was registered as first chargee. But nothing from the advance from 4Syte was paid to Mr Toney. After 3 months, an unknown caller told Mr Toney that he owed £106,000 and had to pay it, otherwise they would repossess the property.
ix) On 24.3.21, Mr Toney received an email from D Stevens telling him that he owed £119,352.79. 4Syte proceeded to bring eviction proceedings and Mr Toney was evicted. Nothing from the proceeds of sale has been paid to Mr Toney.
x) The legal authority instruction form and a third party authority form enabled LPI to conduct the re-mortgage transaction on Mr Toney's behalf. LPI thereby (and on the basis of T Stevens' oral agreement) agreed to arrange an RMC and did make arrangements with a view to an RMC, as well as making arrangements for an RMC to be made. The procurement of the 4Syte loan and no other and the attempt to justify the amount of the loan did in this case amount to advising on that particular RMC.
xi) T Stevens was instrumental in procuring LPI (of which D Stevens is the sole director and shareholder) to contravene the general prohibition in these ways, and D Stevens was personally involved in connection with the repayment of the new loan.
Pasquale Marioni
i) Mortgaged property: 32 Frankland Road, Rickmansworth, WD3 3AU.
ii) The property was mortgaged to Whistletree under 3 separate mortgages, 2 of which fell for repayment in 2017 and 2018. At least one of these loans had been taken for business purposes, but the property was at all times Mr Marioni's home. Mr Marioni tried to sell but was unable to do so, and so could not repay the debt. He found LPI's website.
iii) T Stevens told Mr Marioni that he needed a new loan that would enable him to pay off all his debt, not just the mortgages, so that LPI could take a charge over the property for its fees. He also told him that he would need to provide a different address to be eligible for the loan.
iv) T Stevens sent Mr Marioni by email a legal authority instruction form and a third party authority form, which he signed and sent back. At a meeting 3 weeks later, Mr Marioni also signed two irrevocable fee agreement declarations, a formal instruction and a restriction entry consent form. T Stevens asked Mr Marioni to supply financial documents, which were used to support the lending.
v) A mortgage offer letter came from Aura Finance Ltd ("Aura") for the gross amount of £351,000, for a net loan of £300,267. Mr Marioni did not sign the letter but the loan was completed regardless, on 3.6.19. Aura was registered as first chargee and T Stevens and D Stevens were involved in proving Mr Marioni's identity and getting the lender's interest noted on the property insurance policy.
vi) T Stevens did not respond to a request from Mr Marioni for a breakdown of the fees charged by LPI.
vii) Documents exist relating to an authorised broker called Mortgage World and possible second charge lending, but Mr Marioni did not get any advice from them and no transaction of that kind ensued.
viii) Although Mr Marioni expected to receive some of the new loan, he did not, and when he pursued this with LPI, T Stevens told him that there was no money spare as LPI's fees were £54,870. Edward Marshall Solicitors later paid him a "goodwill" sum of £2,500.
ix) Mr Marioni sold the property in December 2019 and paid £336,954.50 to redeem the Aura mortgage.
x) LPI agreed to arrange an RMC, made arrangements with a view to RMCs and did arrange the RMC with Aura. It is unclear whether LPI advised on RMCs: in my judgment that has not been proved.
Paul Crann
i) Mortgaged property: Cleve Court, Minster Road, Monkton, Ramsgate, CT12 4BA.
ii) Mr Crann had a number of unsecured debts, which were being enforced by bailiffs, and a former business associate had petitioned for his bankruptcy. Mr Crann approached LPI, and T Stevens met him and agreed to help him with a secured loan. He told him that that he would need to give a different address and that LPI would receive a commission for arranging the loan.
iii) Mr Crann signed a FBSE Finance Ltd ("FBSE") short-term finance application form in blank. The completed form contains an address for a different, NPI-owned property with which Mr Crann had no connection, and requested a loan of £105,000. T Stevens completed the form. Mr Crann was unaware of the amount of the loan. He had also signed an irrevocable fee agreement declaration and a restriction entry consent form on 25.5.18 but did not recall being given any explanation of what they were or why he had to sign them.
iv) When the loan completed on 25.9.18, Mr Crann did not receive any money or any documents relating to it.
v) At the end of the loan term, Mr Crann was unable to repay it and had to sell the property in order to redeem the mortgage. At that stage, he realised that a restriction in favour of LPI had been registered against the title. Mr Crann had to pay £58,232.40 to LPI to remove the restriction so that he could sell the property, and then pay FBSE £314,860.50 to redeem the charge.
vi) A letter from Richards Solicitors, LPI's solicitors, dated 22 March 2021, asserting liability under the irrevocable fee agreement declaration, states that LPI went to great lengths to discuss the possible options that Mr Crann had, going forward, and tried various funding sources before it sourced the FBSE lending. If that is right (Mr Crann did not recall it), LPI does not appear to have advised Mr Crann in any real sense, it just decided on and completed the transaction for him. There is no other evidence of advice having been given on a particular RMC.
vii) LPI completed the loan application form, gathered information about Mr Crann's circumstances and finances, arranged the valuation for FBSE and coordinated the provision of necessary information and documents. This was typical of its role in most of these cases. LPI accordingly agreed to arrange an RMC, arranged one and made arrangements with a view to RMCs.
Ashanti Bentil-Dhue
i) Mortgaged property: Flat 6 Tucano Court, Silver Streak Way, Strood, Kent, ME2 2GP.
ii) Ms Bentil-Dhue had received notification of a court repossession hearing when she found LPI. T Stevens contacted her and gathered information about her requirements, over a period of time as those requirements changed, and she entered into a third party authority agreement and a legal authority instruction, both of which she signed on 28.8.18. Later, she signed an irrevocable fee agreement with LPI dated 4.9.18 and a restriction entry consent form.
iii) T Stevens arranged for the valuation of the property, for which Ms Bentil-Dhue paid £347.50, and coordinated the provision of information and documents, including ID documents and proof of address.
iv) Ms Bentil-Dhue states in her witness statement that T Stevens explained to her that LPI would help her find money from a new loan, for a period of 12 months, and then remortgage.
v) T Stevens had contact with Azure Mortgages ("Azure"), an unauthorised broker run by David Donnolly, who emailed Dan Stevens on 4.9.18 with details of a £205,000 loan from Hope Capital. On the same day, FBSE provided a quotation for bridging finance of £123,000 to be secured by a first charge. There was also contact with Soho Wealth.
vi) Ms Bentil-Dhue became uncomfortable with LPI's activities and pulled out of these proposed transactions. Her payment for the valuation was refunded, but she discovered later that LPI had registered a restriction against her property on 5.9.18 and had to pay legal fees of £360 to remove the restriction.
vii) These activities were clearly being carried on by LPI with the end view of Ms Bentil-Dhue entering into an RMC, and liaising with lenders and brokers to obtain quotations amounted to arranging RMCs, even though no RMC was in the event entered into. The preparations went far enough and LPI was instrumental in them. There was also an agreement to arrange RMCs. There is no suggestion that Ms Bentil-Dhue was advised by LPI, however, and in the absence of any steps towards completing a re-mortgage, advice cannot be implied.
Lisa Hopkins and Peter Malcolm
i) Mortgaged property: 15 Burnham Road, Romford, Essex, RM7 7JP.
ii) Ms Hopkins and Mr Malcolm contacted LPI when faced with an eviction hearing and, after providing relevant information to T Stevens, signed a third party authority form and a legal authority instruction form on 24.7.18. On 30.7.18, T Stevens arrived at the property with further forms to sign, which were done in a hurry. These were an irrevocable fee agreement declaration and a restriction entry consent form. Ms Hopkins and Mr Malcolm probably signed them on that occasion, though they were not aware of having done so, and the forms were later completed by LPI.
iii) T Stevens arranged for a lawyer to attend the repossession hearing, buying some extra time in which to re-mortgage. Soho Wealth sent Azure a bridging loan facility terms document on 27.7.18 and T Stevens emailed Azure documents relating to the court proceedings on 31.7.18.
iv) Ms Hopkins paid for a valuation of the property on 20.8.18, which was arranged by LPI.
v) Shortly after this, T Stevens telephoned Ms Hopkins and said that he could not obtain a remortgage owing to a county court debt being registered against the property, and he offered to arrange an SRA with a monthly rent of £1,500 to £1,600. Ms Hopkins declined and had nothing more to do with T Stevens.
vi) When the restriction was discovered, LPI's solicitors told her that she would need to pay £19,124.40 to have it removed. This was paid to LPI out of the proceeds of sale of the property.
vii) The circumstances of this case clearly establish an agreement to arrange RMCs, making arrangements with a view to RMCs and arranging RMCs, the term sheet provided by Soho Wealth indicating that the efforts of LPI would have been causative of lending, had it proceeded. The evidence relied on by the FCA of implied advice is in my judgment insufficient to establish a recommendation of a particular RMC, particularly as T Stevens told Ms Hopkins that a new loan on mortgage could not be obtained.
Phillip and Tracey Greeney
i) Mortgaged property: 2 Whitehouse Crescent, Burham, Rochester, Kent, ME1 3ST.
ii) Prior to an eviction date being set, Mr Greeney contacted LPI and spoke to T Stevens, who said that he would be able to get him a "non-status mortgage" and that he would speak to different lenders and negotiate a good rate. He later confirmed that he was doing so.
iii) Mr and Mrs Greeney signed a legal authority instruction form and a third party authority form, and two days later two different irrevocable fee agreement declarations, one for 5% of valuation and the other for 10% of the gross loan, and a formal instruction authorising LPI to source emergency funding. They must also have signed a restriction application consent form, as a restriction in favour of LPI was registered against the property title.
iv) Mr and Mrs Greeney also signed, at T Stevens' behest, a FBSE short-term finance application in blank, and T Stevens sent it to FBSE. FBSE sent a quotation on 14.8.18 and different terms for a bridging loan on 21.9.18.
v) T Stevens later told them that to get the lending they would have to provide evidence that the property was let, and so T Stevens produced an assured shorthold tenancy agreement, giving a false address for the Greeneys and an unknown tenant, which Mr Greeney signed. The document was false in suggesting that the property was rented out.
vi) LPI arranged a valuation on the property, and Mr Greeney paid LPI directly £1,100 for the valuation fee.
vii) Mr Greeney attended a court hearing with the documents that appeared to show that there would be a re-mortgage.
viii) Thereafter, T Stevens did not contact Mr Greeney again, despite being chased by him. The transaction did not proceed. When the property was sold by the mortgagee, the surplus funds were paid into court. It is unclear whether or how the restriction was removed.
ix) There were therefore here similar agreements and arrangements made as in the cases of other Additional Individuals and Original Individuals with a view to completing an RMC, but which in the event did not eventuate. The oral agreement with T Stevens on behalf of LPI and the signed written agreements amount to agreements to arrange RMCs and arrangements made with a view to RMCs, and what LPI did by acting on the basis of them and sourcing two intended loans from FBSE, on the false basis that the property was tenanted, was an arrangement for RMCs to be made, even though for whatever reason LPI was unable to cause this transaction to complete.
x) There is no sufficient evidence that LPI advised the Greeneys on a particular RMC, or that the term sheets that emerged from FBSE were impliedly recommended to them.
Christine Munden
i) Mortgaged property: 12 Malvern Mews, London NW6 5PT
ii) Threatened with repossession, Ms Munden contacted LPI. T Stevens told her that he would find her a loan and a few days later on 26.3.17 emailed her to say that LPI had been successful in securing a loan with First Stop Fund Management ("First Stop"). This appears to have been obtained through Roy Donnelly Mortgage Services ("Roy Donnelly"), an appointed representative of unauthorised lenders. The lending was to be for 6 months, secured by a first charge.
iii) There is no evidence that LPI introduced Ms Munden to Roy Donnelly with a view to her being given independent advice.
iv) Armed with this document, Ms Munden succeeded in getting a stay of the repossession proceedings. Following the hearing, T Stevens and D Stevens both met Ms Munden and she signed authority forms and the restriction entry consent form.
v) On 2.5.17, T Stevens forwarded to Ms Munden an email from Roy Donnelly asking for more information in connection with two possible bridging lenders.
vi) T Stevens put Ms Munden's house on the market as a "back up strategy" in case the loan did not work out. The loan from First Stop was not accepted by Ms Munden and the property was sold to a private buyer, orchestrated by T Stevens. Ms Munden told the FCA that when the sale completed, £15,000 went to LPI to remove the restriction from the title. This is confirmed by a bank statement.
vii) The evidence in this case is thinner than in others, but there is a detailed file note of a conversation between Ms Munden and the FCA, which sufficiently shows that LPI agreed with her to arrange RMCs and made arrangements with her and with Roy Donnelly with a view to doing so. The steps that LPA took would have resulted in an RMC but for Ms Munden's decision not to accept First Stop as a lender and to sell the property instead. Accordingly, LPI arranged for RMCs within art. 25A(1) of the RA Order as well as making arrangements with a view to that.
viii) There is no evidence that LPI advised Ms Munden on RMCs: it just obtained documents from Roy Donnelly with a view to, first, staving off the repossession of the property, and then Ms Munden re-mortgaging and LPI earning fees. It is somewhat unrealistic to interpret the forwarding of Roy Donnelly's email as any kind of implicit recommendation of the particular RMC lending that was being offered.
Jahsie Levy and Chevanise Dennis
i) Mortgaged property : 3 Mathews Avenue, London E6 6BU.
ii) Mr Levy and Ms Dennis signed forms to enable LPI to proceed to find what funding alternatives they could to assist them to save their home. These included two versions of an irrevocable fee agreement (for 5% of valuation) and must have included a restriction entry consent form, as a restriction in favour of LPI was and still is registered against the property. There will be a remedial order requiring LPI and D Stevens to apply to the Land Registry to remove this.
iii) Azure had become involved and wrote (possibly to LPI) on 5.4.19 stating that bridging finance had been allocated and that documents were being prepared. On the same day, LPI emailed Mr Levy asking for further proof of ID and address and other information relating to status.
iv) Lending from Grosvenor Funding was confirmed in principle and a Finanta application form was sent by Azure to D Stevens and then by T Stevens to Mr Levy on 12.4.19.
v) Mr Levy decided not to proceed with LPI as Ms Dennis was unwilling to sign a new loan agreement.
vi) Mr Levy told the FCA that he was provided with Richards Solicitors' contact details in the event that he wished to request removal of the restriction, or to find out how much LPI would charge for removal.
vii) In this case, Mr Levy and Ms Dennis clearly agreed with LPI that LPI would arrange RMCs for them and LPI took steps to do so, using Azure as brokers. As such, they clearly made arrangements with a view to RMCs being made and, further, arranged for possible RMCs, which might well have eventuated but for these individuals' decision not to proceed in that way. LPI was instrumental in causing the offers of RMC funding to be made.
viii) Again, there is no evidence that LPI did what could be called recommending a particular RMC or RMCs. LPI just passed borrower details to Azure and passed what Azure could obtain to Mr Levy.
Jean Pierre Jacob
i) Mortgaged property: 279 Wickham Lane, Abbey Wood, London SE2 0NX.
ii) Faced with repossession, Mr Jacob contacted LPI in September 2019 and T Stevens told him that LPI could help. He sent him multiple documents to sign, which he did, but never received copies.
iii) One of these was for Edward Marshall Solicitors to represent him at the repossession hearing, but they did not attend and he had to represent himself.
iv) Other documents signed included an irrevocable fee agreement declaration, a third party authority form and a restriction entry consent form. Although Mr Jacob also needed money for his business, the lending was principally in connection with the debt secured on his home.
v) T Stevens used Azure to procure an offer from FBSE (a first legal charge secured loan) which Mr Jacob received and which was nearing completion, but at a late stage Azure insisted on a condition that he was not resident in the property. Matters did not proceed with FBSE, and eventually Mr Jacob went to an authorised broker, UK Property Finance, for assistance.
vi) The restriction on Mr Jacob's property has been removed.
vii) The agreements made orally and signed in writing with LPI are clearly agreements to arrange RMCs. LPI passed information about Mr Jacob and his needs to Azure which resulted in an offer of a bridging loan, albeit on terms that Mr Jacob could not honestly fulfil. In this case, there was apparently no suggestion made about deceiving FBSE about the lending and so no prospect of securing that loan.
viii) Accordingly, in this case, the causal potency required to establish the arranging for RMCs to be made is absent, as no loan was suitable; however, LPI was making arrangements with a view to RMCs.
ix) There is no evidence that LPI advised Mr Jacob on RMCs, nor is it implicit in what LPI did through Azure in this case.
John Baylis and Elena Kreuder
i) Unmortgaged property: 19 Bromstone Road, Broadstairs, Kent.
ii) This case is unusual in that the threat to the owners' possession of their unmortgaged home came from Mr Baylis's trustee in bankruptcy and that eventually the loss that they suffered was not caused by LPI.
iii) For whatever reason, Mr Baylis and Ms Kreuder considered that LPI might be able to help them with the bankruptcy problem. They spoke to T Stevens who said that he could, and then met them in London.
iv) Mr Baylis and Ms Kreuder signed an emergency funding and property fee sale agreement, a third party authority form, a restriction entry consent form, a loan exit confirmation and two different irrevocable fee agreement declarations, all dated 9.7.19. The restriction on the title was registered in favour of LPI the following day.
v) The intention was to obtain a bridging loan of £230,000 to release Mr Baylis's equity in the jointly owned property, which would be used to seek to annul his bankruptcy. T Stevens then told Mr Baylis that he would need to provide evidence of living at a different address; he provided 38 Beach Road, Whitstable as that address, and Ms Kreuder used that address in her application form.
vi) On 5.9.19, D Stevens had emailed Azure to request a 12-month bridging loan for Mr Baylis and Ms Kreuder. Gemini Finance offered a loan to Ms Kreuder for £347,000 gross (£308,483 net). Mr Baylis thought it too high, and the interest payments unserviceable. A further quotation was obtained from FBSE and Soho Wealth were also involved in considering the proposal.
vii) Mr Baylis and Ms Kreuder then sought assistance from a further individual named Ali Shah (unconnected with LPI), which led to the property being transferred into the name of one Syed Ali Haider. Fraud is alleged. Mr Baylis believes that LPI received about £50,000 from the proceeds of sale of the property to Mr Haider. Documentary records show that Richards Solicitors received a sum of £53,220 from Edward Marshall Solicitors on 8.4.21, the day before the transfer to Mr Haider was registered, of which £42,380 was paid into LPI's bank account on 9.4.21.
viii) There is no doubt that LPI through T Stevens agreed to arrange RMCs and made arrangements, through Azure, with a view to RMCs being made. Whether they arranged RMCs depends on whether what they did had sufficient causal potency in connection with an intended RMC. By carrying out the fact finding and passing it on to Azure, and then seeking to make the (dishonest) arrangements that would persuade the lender to offer to lend, which in this case the lender and borrowers were willing to accept, LPI was in my view making arrangements for an RMC, even though it did not proceed.
ix) There is, however, no evidence to support a case that LPI recommended a particular RMC product, nor is it implicit in their acting as a conduit between Azure and its lenders and Mr Baylis. Although Mr Baylis and Ms Kreuder suffered no loss caused by LPI, LPI still made a profit of £42,380 from their dealings.
Julie Joseph
i) Mortgaged property: 15 Selan Gardens, Hayes, Middlesex, UB4 0EA.
ii) Facing eviction, Ms Joseph contacted LPI to seek assistance with her finances. T Stevens appears on this occasion to have asked for a payment in advance, as Ms Joseph says that she paid over £900 to LPI, though there is no separate evidence to confirm the amount, if any, actually paid.
iii) There is a third party authorisation form and a legal authority instruction form, both signed and dated by Ms Joseph on 24.4.19. The only other signed agreement in evidence is a restriction entry consent form, and on 26.4.19 LPI's restriction was registered.
iv) By 30.4.19, the matter was in the hands of Mr Donnolly at Azure, who was communicating with Gemini and Soho Wealth initially, seeking secondary lending with the first legal charge in favour of the existing lender remaining in place. The response from those lenders was negative, so Bridgecrowd (an authorised lender) was then approached and made an offer to lend £53,000 secured by a second charge. The lending was however not business lending and no advice was given by Bridgecrowd, so it was still an RMC that was in contemplation (i.e. none of the exclusions in art. 61A of the RA Order applies).
v) Although there was no signed written agreement by LPI to assist Ms Joseph with a second secured loan, the legal authority instruction form states that lawyers are given authority to represent her for the re-mortgage or sale of the property and that Mr D R Stevens and Mr T Stevens of LPI are her agents for that purpose. There was therefore an agreement that LPI would act as Ms Joseph's agents in seeking a remortgage, which would be an RMC. The payment of £900 or more was to be consideration for the services that LPI agreed to provide, and the restriction is for the purpose of providing security for LPI's fees. There is therefore agreement to arrange RMCs in this case.
vi) Despite the lack of clear evidence, it is to be inferred that T Stevens referred Ms Joseph's needs to Azure: his taking information from her and supplying it to a broker is making arrangements with a view to RMCs. Bridgecrowd appeared willing to lend to Ms Joseph, so the RMC lending was not unrealistic, and in my view what LPI must have done (consistently with its modus operandi in the other cases of the Original Individuals and the Additional Individuals) was arranging for an RMC to be entered into. The fact that it was not, in the event, does not mean that there was no contravention in seeking to arrange it.
vii) There is however no evidence of LPI recommending a particular RMC product. Indeed, it is relatively clear in this case, from the email evidence, that it was very much down to Azure to seek to select and obtain a product, and the lender then sent the offer to the individual in question.
viii) The restriction against the property's title has now been removed.
Michael Ubaka
i) Mortgaged property: 2 Silkfield Road, London, NW9 6QT.
ii) Mr Ubaka was in financial difficulties in August 2019 and facing repossession of the property. He approached LPI and T Stevens persuaded him to seek a re-mortgage rather than a smaller second loan. Mr Ubaka did intend to stay in the property as his residence with his wife.
iii) T Stevens asked Mr Ubaka to sign an irrevocable fee agreement declaration, a restriction entry consent form, a legal authority form and a form authorising LPI to source emergency funding. The restriction was registered on 9.8.19.
iv) LPI assisted in preventing Mr Ubaka's eviction and a new loan offer from FBSE was obtained by Azure. LPI was in communication with Azure about this and instrumental in providing a different address for Mr Ubaka to the lender and a false tenancy agreement and rent receipt that wrongly suggested that Mr Ubaka was not resident. A valuation was carried out, for which Mr Ubaka paid £699 + VAT. He also had to obtain a new insurance policy on the property, as required by FBSE, costing him £800. The loan was ready by June 2020 but for whatever reason it did not materialise and Mr Ubaka was eventually evicted by his existing lender in June 2022.
v) The property was sold for £520,000. Mr Ubaka received a redemption statement from LPI for about £65,000. None of the sale proceeds reached Mr Ubaka.
vi) Richards Solicitors have confirmed that £63,210 was paid to it out of the sale proceeds to discharge the restriction, which was used to pay the Defendants' legal fees and the balance into LPI's bank account on 7.6.23.
vii) There was clearly an agreement to arrange an RMC and making arrangements with a view to an RMC. LPI was involved as an intermediary between Mr Ubaka and Azure. LPI was arranging for an RMC to be made, within art. 25A(1) of the RA Order, because it was assisting Mr Ubaka to make himself acceptable as a borrower to the lender, by bringing false documents into existence. However, in the event, an RMC was not made.
viii) There is no evidence of any advice or recommendation having been made by LPI and I do not consider that it is implicit in being an intermediary where a broker (unauthorised) is responsible for finding the lender and terms on offer.
Michael Philippou
i) Charged property: 5 Melbourne Avenue, Palmers Green, London N13 4SY.
ii) Mr Philippou was indebted under a business loan and had a court judgment registered as a charging order against the property. He owned two other properties that were rented out but lived in the charged property.
iii) T Stevens met Mr Philippou at the property and discussed financing options with him, including a bridging loan. Mr Philippou told the FCA that he found LPI's charges too high.
iv) Mr Philippou only recalls signing a one-page authority form, but must have signed a restriction entry consent form, as a restriction in favour of LPI was registered against the property on 7.3.19. There also appear to be two irrevocable fee agreement declarations signed by him and his daughter.
v) Azure wrote to LPI stating that they had secured emergency funding. At a meeting with Richards Solicitors, the solicitor gave him the impression that the funds were ready to be lent, but no loan materialised.
vi) Mr Philippou later sold the property privately and believed that his solicitor removed the restriction by paying money to LPI. There is a letter from Richards Solicitors to Mr Philippou's solicitors dated 19.12.19 asking for £43,904.40 to remove the restriction. Mr Philippou offered £10,800, but this was not accepted. In the event, it appears that the restriction was removed without any payment on or about 22.1.21, so no loss was suffered.
vii) There was therefore clearly an agreement to arrange RMCs and LPI must have made arrangements with a view to RMCs by introducing Mr Philippou's case to Azure. There is however no sufficient evidence in this case that LPI made arrangements for an RMC. What emergency funding had been arranged by Azure, if any, is unclear: no lender is identified. T Stevens' reply dated 25.3.19 to Mr Philippou's email of the same date explained that it was Mr Philippou who was not taking matters forward or committing to the loan and the valuation that would be needed.
viii) There is no sufficient evidence that LPI advised Mr Philippou on particular RMCs: it simply said that it could help him with a bridging loan and in the 25.3.19 email confirmed certain terms of the proposed loan, in answer to Mr Philippou's questions.
Ashley and Adrian Hayes
i) Mortgaged property: 7 Lochmere Close, Erith, Kent, DA8 1EA.
ii) As a result of repossession proceedings of their home, the Hayes contacted LPI after attempts to restructure debt through another person failed. T Stevens told them that he could obtain a new bridging loan to pay off two secured loans and an unconnected bridging loan. LPI assisted with the court proceedings by providing on 30.4.18 an application form for a stay.
iii) An invoice dated 2 February 2018 had charged Mrs Hayes £540 inc VAT for court papers and legal representation, and it was paid on that day by Mr Hayes.
iv) The evidence from the Hayes is limited as to what happened with LPI, but there is one signed irrevocable fee agreement declarations dated 28.4.18 and a restriction entry consent form of the same date.
v) On 30.4.18, Roy Donnelly sent T Stevens confirmation that a loan was ready for lawyers to be instructed and a valuation fee had been paid (after T Stevens chased it up) and a valuation was completed. This was for a bridging loan of £265,312 gross from Together Commercial Finance Ltd ("Together") for a term of 9 months. Together was an appointed representative of another company in the same group, but not itself an authorised lender.
vi) The Hayes were billed £1,482 on 4.5.18 for solicitors, agents' and broker's fees.
vii) Neither the instructions of the Hayes nor the documents show what happened beyond these few details. The loan did not proceed and the property was repossessed, with a shortfall to the existing lenders and no payment to LPI out of proceeds of sale.
viii) The signed agreement and what the Hayes can recall show that T Stevens on behalf of LPI agreed to arrange RMCs and made arrangements with a view to RMCs being made, by referring the Hayes to Roy Donnelly. In this case, there is evidence that LPI remained involved in seeking to arrange the intended RMC and played a sufficient part to have arranged what would have been an RMC, if it had completed.
ix) There is no evidence to support a case that LPI advised the Hayes on a particular RMC.
Paul and Kerry Connolly
i) Mortgaged property: 35 Hanover Gardens, Ilford, Essex, IG6 2RA.
ii) Mrs Connolly died and her husband had been unaware until 2022 of the arrangements that she had been making with LPI. They had been in arrears with their mortgage payments and Mrs Connolly had been made bankrupt.
iii) On 23.7.18 and 24.7.18, Mrs Connolly signed irrevocable fee agreement declarations, third party authority forms and restriction entry consent forms. The restriction was registered on 6.8.18.
iv) On 10.8.18, Mrs Connolly was invoiced for £6,000 by LPI and paid a total of £3,019 in six instalments.
v) An additional irrevocable fee agreement declaration was signed on 30.8.18.
vi) LPI used Azure and David Donnelly to source a loan. As a result, six lenders issued indicative terms. Two of these (FBSE and Grosvenor) progressed to the instruction of solicitors.
vii) The Grosvenor documents suggest that the loan was for business purposes and that Mrs Connolly had another address, but Mr Connolly had no knowledge of those matters. In the light of other cases, the inference is that this was part of a device by LPI and others to deceive the lenders as to the nature of the borrower and the security offered.
viii) On 7.10.19, LPI issued a redemption statement for £37,024.80, and on 22.4.20 a further redemption statement for £67,654.80, pursuant to the irrevocable fee agreements. These must have been in anticipation of sale or remortgage of the property. They indicated that the restriction would be removed on payment of those sums.
ix) The transaction with lenders sourced through LPI did not proceed, probably because of the complication of Mrs Connolly's bankruptcy. When Mrs Connolly sought to remortgage with another lender, LPI sought a payment of £47,000 for the removal of the restriction.
x) Mr Connolly has agreed terms with his existing lenders and is still in possession. The restriction in favour of LPI is still registered and so a remedial order will be made in this case requiring LPI and D Stevens to cause it to be removed.
xi) There is no doubt in this case that LPI agreed with Mrs Connolly to arrange RMCs and made arrangements with a view to RMCs being made. There was also sufficient done by LPI to assist Azure and Roy Donnelly, in terms of progressing the intended transaction, for LPI to be found to have arranged for RMCs to be made, even though the transactions did not proceed.
xii) There is no evidence of LPI advising Mrs Connolly on any particular RMC.
Steven and Jane Burrows
i) Mortgaged property: Clover Cottage, 1 Church View, Faringdon, SN7 7TA.
ii) The Burrows got into difficulty in early 2019 with servicing their mortgage with Royal Bank of Scotland, and they approached LPI to source a further loan.
iii) It was probably the intention of the Burrows at the time to finish the extension works at the property and then live in it.
iv) At the initial meeting with T Stevens, on 19.3.19 the Burrows signed a number of documents, at his request, without knowing what was in them, but no copies of these are available. A restriction in favour of LPI was placed on the title to the property on 20.3.19, so a restriction entry consent form was clearly one of them. The likelihood, given LPI's standard approach as evidenced in other cases, is that an irrevocable fee agreement declaration and authority forms were also signed.
v) On 20.3.19, T Stevens sent Mr Burrows an email stating that he would be more than happy to help and was sure that he could source them a deal.
vi) Emails on the FCA's file show that Azure sent a quotation for funding, but for whatever reason (which is obscure) this did not proceed. In April 2019 LPI agreed to remove the restriction. Text messages and instructions from Mr Burrows indicate that Mr David Donnelly of Azure assisted in persuading T Stevens to agree to remove the restriction.
vii) Mr Burrows told the FCA that he sourced another short term loan, finished the extension building works and sold the property in 2020. No relevant loss was suffered by the Burrows from LPI's activities.
viii) There was an agreement made by LPI to arrange an RMC for the Burrows and some arrangements were made (obtaining the necessary factual information and passing this on to Azure) with a view to an RMC, but nothing is known about the terms of the lending that was offered. On balance, I find that LPI did enough to amount to arranging for an RMC, on the basis that what was offered to the Burrows in their circumstances by Azure was probably an RMC.
ix) The FCA accepts that there is no evidence that LPI advised on the RMC in this case.
Dariusz and Alicia Mroczek
i) Mortgaged property: 12 Durbin Road, Chessington, Surrey, KT9 1BU.
ii) The Mroczeks were facing repossession proceedings and approached LPI. T Stevens told them on the telephone that he could help them remortgage the property. They met him and declined his offer of an SRA. They then signed two irrevocable fee agreement declarations, a restriction entry consent form, a third party authority form and an emergency funding and property fee sale agreement on 30.7.19. A restriction in favour of LPI was registered against the title to the property on 31.7.19.
iii) LPI corresponded with Azure and Bridge Finance Direct, an authorised lender ("Bridge") to arrange lending, which included obtaining the necessary information and documents from the Mroczeks and arranging a valuation. £1,000 was paid for the valuation, but it did not happen. The proposed exit strategy for the Bridge loan was the sale of the property, so the lending would not have been excluded from being an RMC by reason of Bridge being an authorised lender. There is also evidence of an authorised broker, Mortgage World, being involved, but no evidence of any advice being given by them.
iv) Several offers were made, and Azure provided an alternative residential address for the Mroczeks. None of the offers was sufficient to cover the existing debt. Nothing further was heard from LPI at that stage.
v) When, later, the Mroczeks decided to sell the property, they discovered the restriction. They paid LPI £22,995.45 to have it removed.
vi) There is clearly in this case an agreement by LPI to arrange RMCs, arrangements being made by LPI with a view to RMCs, and the taking of steps that would have been causative of an RMC had the Mroczeks been willing to accept the terms offered. Again, there is no evidence of any advice being given on a particular RMC, as opposed to on a remortgage strategy. T Stevens left it to the brokers to come up with a product and he did not advise on what they produced. Even if (which is unclear) T Stevens sent details to Bridge directly, that is not sufficient in itself to amount to a recommendation of whatever product Bridge offered.
James and Frances Williams
i) Mortgaged property: 1 Uplands Way, Minster-on-Sea, Sheerness, ME12 3EF.
ii) Having failed to sell their home in order to pay off the mortgagee and faced with repossession, the Williams decided to seek a bridging loan as an interim measure, while they continued to try to sell. T Stevens said that he would assist them to get a bridging loan.
iii) The Williams signed an irrevocable fee agreement declaration, a restriction entry consent form, a third party authorisation form and a legal authority instruction form. They paid LPI for a valuation (amount £828).
iv) On 20.4.20, T Stevens emailed Mrs Williams and told her that her only option was to seek "emergency finance" and he requested documents in support of an application to lenders. Roy Donnelly were engaged and obtained indicative terms for a loan of £317,410 on 26.4.20, which they sent to LPI (no advice being given to the Williams), and for a loan of £298,000 by HNW Lending Limited ("HNW"), an authorised lender, on 11.6.18. These terms stated that the property was not the primary residence of the Williams but that was untrue. HNW did not advise the Williams and the loan was intended to be repaid by a sale.
v) However, by then, the Williams had obtained a buyer for their property and told T Stevens that they no longer required a loan.
vi) When the property was sold, the restriction was discovered and the Williams had to pay LPI £15,620.40 to release it.
vii) There is clearly an agreement by LPI to arrange RMCs and arrangements made by LPI with a view to RMCs. I consider that sufficient steps were taken by LPI to arrange RMCs to satisfy the causation requirement, as two offers were made that, if completed, would have been RMCs. However, there is no evidence of any advice by LPI on a particular RMC, as previously explained above.
Mark and Zena McKay
i) Mortgaged property: 35 Elstree Road, Bushey Heath, Bushey, WD23 4GH.
ii) Faced with repossession, the McKays approached LPI and T Stevens agreed to arrange a remortgage. There is no signed irrevocable fee agreement declaration but there is a signed restriction entry consent form dated 30 May 2019, and LPI applied the following day to register the restriction against the title to the property.
iii) D Stevens sought a 12-month bridging loan through Azure and the McKays were asked to pay £1,300 to LPI for a valuation. There is no evidence that the valuation was carried out, however.
iv) The McKays sold the property and an application to remove the restriction was made on 31 July 2019.
v) There is sufficient evidence that LPI agreed to arrange RMCs and made arrangements with a view to RMCs. However, it does not appear that any RMC or offered RMC materialised, given the short time between the retainer of LPI and the sale of the property. In this case, therefore, there is no arranging for an RMC to be made or advice on a particular RMC.
Nigel Bidgood
i) Mortgaged property: 44 Arundel Road, Worthing, West Sussex, BN13 3EQ.
ii) In mortgage arrears, Mr Bidgood looked for new funding and found LPI online. He spoke to T Stevens about remortgaging the property and signed an irrevocable fee agreement declaration and a restriction entry consent form on 17.4.19, the day before an eviction was due, and an instruction to source refinancing through brokers to avoid eviction.
iii) LPI used Azure to write a letter dated 17.4.19 stating that funding to remortgage the property had been allocated and underwritten. This was doubtless to produce to the court. However, on the same day Soho Wealth issued to Mr Bidgood indicative facility terms, subject to due diligence and valuation. But in the event Mr Bidgood did not proceed and became embroiled in a dispute with Richards Solicitors about the ineffectiveness of the funding proposal.
iv) The property was eventually repossessed and Richards Solicitors tried to obtain payment for LPI in the sum of £54,720 for removal of the restriction but were told by the existing second lender that there was no surplus. Mr Bidgood suffered no loss resulting from LPI's contraventions.
v) LPI clearly agreed to arrange RMCs and make arrangements through Azure with a view to an RMC being made. No suitable product could be found but LPI nevertheless took sufficient steps to arrange for an RMC to be made. There is no evidence of advice on a particular RMC being given by LPI.
Steve and Dianna Clark
i) Mortgaged Property: 74 Cruikshank Grove, Milton Keynes, MK8 0HG.
ii) The Clarks approached LPI seeking to remortgage their property to pay off existing debts.
iii) They signed two irrevocable fee agreement declarations, a restriction entry consent form, a legal authority instruction form and a third party authority form in favour of LPI on different dates in October 2018.
iv) LPI then sought to arrange finance through Azure. T Stevens provided the details of what was required.
v) Bridgecrowd (a regulated lender) offered a business purposes buy-to-let loan on 4.12.18, on the basis of wrong information provided to them, and Soho Wealth offered indicative terms for a bridging loan on 6.12.18; but those loans did not proceed and the Clarks remortgaged through a different company.
vi) LPI sought to enforce its restriction when the property was sold on 25.9.19 but there were no sufficient funds. No loss was therefore suffered by the Clarks.
vii) There was clearly an agreement to arrange RMCs and arrangements were made with a view to that end. LPI took sufficient steps to seek to bring about an RMC and so arranged for an RMC to be made, though in the event none was.
viii) There is no evidence to support a conclusion that LPI advised on a particular RMC.
David Rogers
i) Mortgaged property: 23 Laurel Manor, Sutton, SM2 5EJ.
ii) Repossession proceedings were brought against Mr Rogers and in February 2018, shortly before an eviction, he contacted LPI and spoke to T Stevens. Mr Rogers signed a number of documents, including: a legal authority instruction form, a third party authorisation form, an irrevocable fee agreement declaration and a restriction entry consent form on 27.2.18.
iii) LPI's restriction was registered on 28 February 2018.
iv) Mr Rogers made payments of £354 and £595 to LPI at or about that time. Mr Rogers discussed with T Stevens possibly selling the property to NPI and there is, oddly, a signed property sale agreement dated 27.2.18.
v) The eviction was stayed on the basis of documents showing an intended bridging loan from Together and the marketing of the property, and alternatively lending sourced by Roy Donnelly, however Mr Rogers wished to remain in the property if he could.
vi) In March 2018, LPI sourced a second loan proposal from KPZ Ltd for £78,680 for 6 months, and a Together loan proposal for lending of £140,310 and £59,630 on first and second charges.
vii) On 22.3.18, Mr Rogers instructed LPI to sell the property. An agreement of sale and purchase with NPI was signed by D Stevens on 21.6.18, following a valuation in the sum of £275,000.
viii) Following a further eviction date being fixed in September 2018, NPI bought the property for £154,000 on 26.11.18. However, NPI has not been registered.
ix) On 22.10.19, RBS instigated possession proceedings and NPI discovered that it had not been registered. The current position is that the property has now been sold (presumably by RBS) and that the surplus proceeds of sale are held by solicitors and LPI's restriction has been removed. Mr Rogers therefore no longer owns the property legally or beneficially, and there may or may not be some part of the residue of the sale proceeds payable to NPI. The terms of the restriction are unenforceable against Mr Rogers personally.
x) In this rather unusual case, therefore, LPI agreed to arrange RMCs and made arrangements with a view to that end, by obtaining and passing the relevant details to Roy Donnelly and KPZ. Given the loan proposals made by KPZ and Together, LPI also arranged for RMCs to be entered into even though in the event no transaction took place.
xi) There is no evidence that LPI advised on particular RMCs.
Andrew and Louise Burt
i) Mortgaged property: 106 Lower Hanham Road, Hanham, Bristol, BS15 8SB.
ii) Mrs Burt contacted LPI and spoke to T Stevens on the telephone. He required her to sign some forms. The Burts did sign two irrevocable fee agreement declarations, a third party authority form, a legal authority instruction form and a restriction entry consent form.
iii) The restriction was registered on 24.8.18.
iv) LPI then used Azure to source lending. The only documentary evidence in this regard is an email from David Donnelly at Azure to LPI saying that he had "sent off Louise Burt for terms".
v) The Burts are still living in the property and do not claim to have suffered any loss as a result of contact with LPI.
vi) The agreements signed are evidence of an agreement to arrange RMCs and it can be inferred that LPI made arrangements with a view to RMCs when they referred the Burts' case to Azure. However, there is no evidence that any RMC was arranged or that advice was given on a particular RMC.
Anna Mamtsumi Sibeko
i) Mortgaged property: Flat 98, Muschamp Road, Carshalton, Surrey, SM5 2SE.
ii) Ms Sibeko was facing repossession by RBS and rang T Stevens at LPI on 15.5.19. She told him that she wanted to pay off the outstanding mortgage and have £15,000 for rented accommodation for when the property was sold. T Stevens said that he could help her and that he would take 15% of the sale proceeds as his commission.
iii) Ms Sibeko recalls signing forms that gave LPI authority to sell the property and the right to 15% of the sale proceeds, but does not recall signing a restriction entry consent form. She did in fact sign such a form and LPI registered its restriction. She also signed a third party authority form and an irrevocable fee agreement declaration.
iv) LPI managed to delay the repossession by RBS to allow a re-financing. For that purpose, it obtained through Azure terms from Soho Wealth terms for a loan of £232,000 and a letter from Azure stating that an emergency loan would pay off all arrears, interest, costs and secured debt.
v) The proposed lending was not taken any further. After the court hearing, Ms Sibeko did not hear further from LPI. It appears that LPI's interest on this occasion was in being able to sell the property and recover its 15%. As nothing happened, Ms Sibeko looked for a buyer of the property herself.
vi) The property sold in about early August 2019. A completion statement shows that the sale price was £215,000, leaving a surplus after payment of many debts and £12,564.40 to LPI of £3,942.84. Ms Sibeko was therefore in error in telling the FCA that she thought the property sold for only £135,000 as she recalled receiving about £2,000 in cash following the sale.
vii) The evidence in this case suggests that Ms Sibeko was looking to sell, probably realising that she could not afford the property, but that in the meantime she was looking to re-finance to pay off her existing debts and continue living in the property until sale.
viii) LPI clearly agreed to arrange an RMC as well as agreeing to sell the property, and it made some arrangements with a view to an RMC, as evidenced by the referral to Azure. However, it appears that following the successful court hearing, LPI took no further steps towards obtaining a loan for Ms Sibeko and was waiting for the sale of the property, which it had authority to carry out. In these circumstances, I consider that the Soho Wealth indicative terms were only obtained for limited purposes and that in this case LPI did not arrange for an RMC to be entered into because the causative nexus required does not exist. Neither did LPI advise on a particular RMC.
Serguey Palitsyne
i) Mortgaged property: 85 Globe View, 10 High Timber Street, London EC4V 3PR
ii) Facing eviction on account of mortgage arrears of about £7,000, Mr Palitsyne's son, Anton, who was living in the property, contacted LPI and spoke to T Stevens. Mr Palitsyne, acting by Anton, was not seeking a loan in connection with a business. T Stevens advised Anton that the minimum loan that he could provide was £120,000, and that it should be used to pay off the existing mortgage and arrears.
iii) Mr Palitsyne and Anton signed an irrevocable fee agreement declaration, a restriction entry consent form, a third party authority form and a legal authority form on 5.8.18. The restriction was registered the following day.
iv) T Stevens provided Mr Palitsyne with indicative terms from Soho Wealth and a letter from Azure confirming the availability of funding. At the same time, however, Mr Palitsyne obtained a loan from a friend and paid off the mortgage arrears, with the result that the eviction was cancelled.
v) LPI was informed and on 10.8.18 it issued an invoice for £6,000 in fees. Mr Palitsyne refused to pay and the restriction remains in place. There will therefore be a remedial order requiring LPI and D Stevens to procure the removal of the restriction.
vi) LPI accordingly agreed to arrange RMCs and made arrangements with a view to RMCs. In this case, the intention of LPI was to effect a remortgage, and matters went no further because Mr Palitsyne acted very swiftly to obtain funds from elsewhere. The terms from Soho Wealth were in accordance with what T Stevens had told Mr Palitsyne he would source. In these circumstances, but for Mr Palitsyne's other funding, it is reasonable to suppose that the loan would have proceeded in due course. In those circumstances, LPI did arrange for an RMC within art. 25A(1) of the RA Order.
vii) LPI did not, however, advise on a particular RMC.
Jennifer Bower
i) Mortgaged property: The Old Chapel. Tilford Road, Newstead Village, Nottingham, NG15 0BU.
ii) Ms Bower bought this light industrial property with bridging funding provided by Affirmative Finance Ltd ("Affirmative") with a view to converting it into a residential property for herself and her family. The funding was a regulated product for a residential purchaser.
iii) Owing to delays with the project, Ms Bower could not repay the Affirmative loan and Affirmative started possession proceedings. Ms Bower contacted LPI and T Stevens explained that he could help her to re-finance the property.
iv) Ms Bower signed a full raft of LPI documents, including an irrevocable fee agreement declaration and a restriction entry consent form, and a restriction against the title in favour of LPI was registered on 25.11.19.
v) LPI helped to suspend the eviction proceedings in court with indicative terms from Azure for an unregulated loan. Then T Stevens himself tried to source a loan from Barton Bridging Capital Ltd ("Barton") and Ms Bower signed and dated (29.11.19) but did not complete an application form for a Barton loan. On 9.1.20 he emailed ID documents and the application form to Azure, and on 10.1.20 Azure sent an email referring to LPI and including indicative terms from Barton for a gross loan of £210,000.
vi) LPI arranged for a valuation to be carried out, but when this was produced it was for a much lower figure than Ms Bower required. She had no more contact with LPI.
vii) On 14.2.22 the property was repossessed by Affirmative and sold on 23.2.23. Affirmative was repaid in full and after costs of sale £33,004.02 was paid into court. Affirmative's explanation for this alerted Ms Bower to the presence of the registered restriction. The funds are understood still to be in court.
viii) The terms of the irrevocable fee agreement declaration and the restriction entry consent form are not enforceable by LPI against Ms Bower and LPI therefore has no claim to the monies in court.
ix) It is clear from this that LPI agreed to arrange RMCs, made arrangements with a view to RMCs and arranged for RMCs to be made. LPI actually took the initiative in using Barton as the lender. In these circumstances, it can also be said that, in procuring an offer of lending from Barton, LPI was impliedly recommending to Ms Bower the RMC product that Barton offered.
| RMC Individual |
Fees paid separately to LPI | Fees paid separately to others | Differential loss calculation | Repossession costs | Rental value benefit | Total loss |
| Moroney | £238,269.51 less £117,544.41 = £120,725.10 | £29,827 | July 2018-Oct 2019: £17,500 | £73,398.10 | ||
| Sanchez | £615,000 less £173,865.28 and £73,173.30 SRA comp- ensation) = £367,961.42 | £29,827 | Oct 2019-July 2023: £76,500 | £261,634.42 | ||
| Harrington Thomas | £224,045.40 less £120,949.33 = £103,096.07 | £29,827 | Apr 2020 to Sept 2020: £7,000 | £66,269.07 | ||
| Bowman | £132,500 less £24,464.31 = £108,035.69 | £29,827 | Jan 2020-May 2023: £22,200 | £56,008.69 | ||
| Terroni | £34,500 (on sale of property) | £940 (valuat-ion fee) | £537,318.59 less £392,316.01= £145,002.58 | £29,827 | July 2018-May 2019: £18,000 | £132,615.58 |
| Begbaaji | £337,117.50 less £222,329.34 = £114,788.16 | £29,827 | Apr 2019-Aug 2019: £6,600 | £78,361.16 | ||
| Jackson | £632,379.61 less £266,782.96 and credit of £30,000 from NPI = £335,596.65 | £29,827 | July-Sept 2019: £3,000 | £302,769.65 | ||
| Alfred | £12,000 (removal of restriction) | £331,697.10 less £89,406.94 = £242,290.16 | £29,827 | May 2019-June 2020: £31,500 | £192,963.16 | |
| McFarlane | £599,293.87 less £89,739.76 = £509,554.11 | £29,827 | July 2018-June 2022: £75,200 | £404,527.11 | ||
| Caton | £294,837.88 less £99,014.63 = £195,823.25 | £29,827 | Feb 2020-Mar 2022: £32,400 | £133,596.25 | ||
| Milone | £294,009.82 less £196,675 = £97,334.82 | £29,827 | Jan 2019-June 2023: £63,600 | £3,907.82 | ||
| De Souza | £252,973.36 + £114,397.19 less £78,820.62 = £288,549.93 | £29,827 | Oct 2018-Dec 2021: £46,250 | £212,472.93 | ||
| Hazel | £834 (valuation fee) | £712,403.47 less £208,683.55 = £503,719.92 | £29,827 | Feb 2020-Feb 2023: £69,000 | £405,726.92 | |
| Kershaw | £148,267.77 less £64,933.78 = £83,333.99 | £29,827 | May 2018-Mar 2019: £9,500 | £44,006.99 | ||
| Toney | £232,040.96 less £56,826.87 = £175,214.09 | £29,827 | July-Nov 2020: £9,066.67 | £136,320.42 | ||
| Marioni | £336,954.50 less £246,473.32 (inc. £2,500 paid to Mr Marioni by LPI's solicitors) = £90,481.18 | £29,827 | June-Dec 2019: £13,400 | £47,254.18 | ||
| Crann | £58,232.40 (restriction removal) | £800 (valuat-ion fee) | £314,860.50 less £84,000 = £230,860.50 | £29,827 | Sept 2018-June 2021: £79,750 | £180,315.90 |
| RMC Individual |
Fees paid to LPI | Fees paid to others | Total loss |
| Suluk | £17,804.40 (restriction removal) | £800 (valuation fee) | £18,604.40 |
| Karaman | £2,900 (costs) | £2,900 | |
| Cassar | £44,107.37 (restriction removal) | £838.80 (valuation fee) | £44,946.17 |
| Onyema | £699 (valuation fee) | £699 | |
| Jardim | £35,366.85 (restriction removal) | £35,366.85 | |
| Elliott | £834 (valuation fee) | £834 | |
| Colbourne | £22,204 (restriction removal) | £485 (valuation fee) | £22,689 |
| Alexander | £51,712.56 (restriction removal) | £756 (valuation fee) | £52,468.56 |
| Peters | £300 (valuation fee) | £300 | |
| Dickens | £74,086.86 (restriction removal) | £74,086.86 | |
| Fletcher | £47,000 (restriction removal) | £47,000 | |
| Riddell | £1,068 | £1,068 | |
| Assaf | £197.40 (fees) | £197.40 | |
| Bhatti | £480 (valuation fee) | £480 | |
| Di Placido | £1,500 (valuation fee and other services) | £1,500 | |
| Bentil-Dhue | £360 (restriction removal) | £360 | |
| Hopkins and Sussex | £19,124.40 (restriction removal) | £834 (valuation fee) | £19,958.40 |
| Greeney | £1,100 (valuation fee) | £1,100 | |
| Sibeko | £12,564.40 (restriction removal) | £12,564.40 | |
| Munden | £15,000 (restriction removal) | £15,000 | |
| J-P Jacob | £450 (services fee) | £450 | |
| Baylis and Kreuder | £42,380 profit received by LPI | £42,380 | |
| Hayes | £540 (services fee) | £540 | |
| Connolly | £3,019 (services fee) | £3,019 | |
| Mroczek | £22,993.45 (restriction removal) | £900 (valuation fee) | £23,893.45 |
| Williams | £15,620 (restriction removal) | £828 (valuation fee) | £16,448 |
| Bower | £414 (services fee) | £414 | |
| Ubaka | £69,822 (restriction removal and legal fees) | £838.80 | £70,660.80 |
| Rogers | £949 (services fee) | £949 |
| SRA Individual | Lost equity | Repossession costs | Total loss |
| Moroney | (total SRA loss) £220,417 | (not deducted, as previously deducted from losses resulting from earlier RMC) | £220,417 |
| Lea | £69,774.07 | £29,827 | £39,947.07 + £395 (see at [134] above) = £40,342.07 |
| Waters | £44,650.45 | £29,827 | £14,823.45 |
| Dann | £42,414.02 | £29,827 | £12,587.02 |
| Gillett | £40,756.29 | £29,827 | £10,929.29 |
| Tsormetsri | £52,539.44 | £29,827 | £22,712.44 |
| Mitchell | £89,115.32 | £29,827 | £59,288.32 |
| Edwards | £70,000 | £29,827 | £40,173 |
| Savage | £71,631.29 | £29,827 | £41,804.29 |
| Richardson | £108,086.30 | £29,827 | £78,259.30 |
| Rameshwar | £164,637.09 | £29,827 | £134,810.09 |
| Addicott | £74,500 | £29,827 | £44,673 |
| Kershaw | £91,732.23 | (not deducted, as previously deducted from losses resulting from earlier RMC) | £91,732.23 |
