The boss of a debt management firm acquired using client money rather than personal funds has today been banned permanently from working in the financial services sector.
Darren Lee Newton purchased Manchester-based First Step in 2013, transferring £322,500 in client monies to former director Christine Whitehurst as payment.
The firm operated as a debt management service and would hold client monies before making settlement offers to customers’ creditors.
The FCA says First Step already had a significant client money shortfall in its accounts of over £6m when acquired by Newton.
In May this year, the FCA said First Step’s clients were expected to be transferred to Newton’s other firm, Debt Help and Advice, once First Step was purchased.
This did not happen, causing the firm to collapse.
The 4,000-client firm went into administration in May 2014 with a £7.1m shortfall, but many claims were not covered by the Financial Services Compensation Scheme.
FCA executive director of enforcement Mark Steward says: “Mr Newton blatantly used customers’ money to fund the purchase of First Step from Christine Whitehurst. This was dishonest and showed a complete lack of integrity.
“First Step was meant to help people manage their debts, but Mr Newton’s actions put them one step backwards and in a worse position than before.”
Whitehurst and her husband, Adrian, were also banned by the FCA last October for dishonestly appropriating money from First Step.