A fine of £21,000 – reduced from £175,000 – has been imposed on one of two men behind ‘Channel Islands Finance Limited’.
Scott Carré and Jason Cook ran the business together but the GFSC has acknowledged that Mr Carré was the firm’s sole effective Executive Director.
He’s been fined – while Mr Cook has not – after a GFSC investigation found that the Firm had materially contravened section 40 of the Lending, Credit and Finance Law and section 7 of the Enforcement Powers Law.
The investigation also found that Mr Carré had materially contravened sections 7 and 109 of the Enforcement Powers Law.
The investigation found that Mr Carré and Mr Cook are not ‘fit and proper persons’.
As well as being fined, Mr Carré has been banned from holding any supervised role for seven years.
Mr Cook has been banned from holding any supervised role for a period of 2 years and 1 month.
Mr Carré and Mr Cook worked together as Channel Islands Finance Limited providing loans to retail and commercial customers, as well as loan broking services.
The firm was registered through the GFSC and had a licence as a credit business.
The GFSC said Channel Islands Finance Limited had previously been granted ‘discretionary exemptions’ pending the determination of its application under section 40 of the Lending, Credit and Finance Law. These discretionary exemptions were subject to a number of conditions.
A licence application was refused in November 2023 and further discretionary exemptions were granted so the lending business could be wound up.
The GFSC’s investigation started in September 2024 when concerns were raised that Channel Islands Finance Limited was not complying with the conditions of the discretionary exemptions granted to it.
The investigation found that the business had “materially contravened section 40 of the Lending, Credit, and Finance Law’ as well as “Section 7 of the Enforcement Powers Law”.
This investigation found that Mr Carré had himself contravened sections 7 and 109 of the Enforcement Powers Law, and that he and Mr Cook are “not fit and proper persons”.
A lot of the issues around Channel Islands Finance Limited revolved around its lending business.
The firm’s lending was funded by loans from a third party, identified by the GFSC in its report as ‘Person A’.
Channel Islands Finance Limited’s customer loan repayments were assigned to Person A. However, the GFSC investigation found that Person A had only lent funds to the firm on the basis that less than £2,000 was lent to each subsequent customer.
Mr Cook told Person A that any larger loans were dealt with by a broker, however it was later proven that Person A’s money was being used to fund the larger loans.
The GFSC said Mr Cook’s statement to Person A was “misleading”.
The GFSC acknowledged that Mr Cook did not benefit financially from any of the rule breaking – but Mr Carré’s situation was more complex.
It was determined that “a large proportion of the funds lent by Person A” were subsequently paid out to Mr Carré, or lent to ‘Company B’ and ‘Business C’, both of which were owned by him.
The GFSC said that where funds were lent to Company B, a significant portion of the funds were often immediately paid to Mr Carré.
Neither Mr Carré nor Mr Cook could adequately explain how Mr Carré’s obvious conflicts of interest, in lending funds to Mr Carré’s own businesses, were managed and the GFSC said there weren’t any documents showing how the loans were approved and by whom.
Mr Carré was the sole signatory on Channel Islands Finance Limited’s bank accounts which was “exacerbated” its failings, said the GFSC.
The Commission also said “Mr Carré was able to abuse his position at the firm to loan his other businesses significant sums”, adding that “to date, the loans have not been repaid”.
At one point during the investigation, Mr Carré told the GFSC that the loan to Company B had been repaid before later admitting that it hadn’t been.
A list of loans associated with Channel Islands Finance Limited did not include money shared from Person A a month after the discretionary exemptions had been imposed on it in August 2023.
Last July, Mr Carré told the GFSC that Channel Islands Finance Limited had money available to repay Person A, before later admitting that it didn’t.
Where Mr Carré made “false and/or misleading” statements, the GFSC found him in contravention of section 109 of the Enforcement Powers Law.
In conclusion, the GFSC found that Mr Carré failed to fulfil the ‘fit and proper criteria’ set out in Guernsey’s Lending, Credit and Finance Law, and he “failed to demonstrate that he acted with probity, competence and soundness of judgement”.
The Commission summed up his failings as providing false and/or misleading statements to the Commission on numerous occasions, failing to comply with a statutory Notice, knowingly accepting a further loan from Person A when he knew this would be in breach of the conditions of the discretionary exemption granted in August 2023; and abusing the lack of controls and his position at the Firm to benefit himself by making significant loans to Company B and Business C.
The Commission also found that “Mr Cook failed to fulfil the fit and proper criteria set out in Schedule 4 of the Lending, Credit and Finance Law”, deciding he had “failed to demonstrate that he acted with probity, competence, soundness of judgement and diligence”.
Mr Cook’s failings were summed up as knowingly providing false and/or misleading information to Person A regarding the size of the loans being provided by Channel Islands Finance Limited, knowingly accepting a further loan from Person A when he knew this would be in breach of the conditions of the discretionary exemption granted in August 2023, and failing to ensure that he approved the loans to Company B and Business C, to avoid Mr Carré being involved.
The GFSC said that while Mr Carré “received a substantial financial benefit from the contraventions”, Mr Cook did not benefit financially.
Mr Cook co-operated fully with the Commission throughout its investigation, and gave legitimate reasons for why he was not always actively involved in the business.
However, Mr Carré and Mr Cook’s actions put Person A at a “significant risk of financial loss”.
While Person A’s loans have now been repaid, they were repaid by a third-party, not Channel Islands Finance Limited.
No financial penalty was imposed on Mr Cook and the £21,000 penalty imposed on Mr Carré was reduced “due to their financial positions”, said the GFSC.
The Commission also said that Channel Islands Finance Limited, Mr Carré, and Mr Cook agreed to settle at an early stage of the process and this has been taken into account by applying a discount in relation to the sanctions imposed upon them.