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The Financial Services Authority (FSA) have admitted that they have no routine compliance checks in place which would have prevented a Handbridge conman defrauding pensioners out of £1.3 million.
A Freedom of Information Act request, on behalf of Handbridge.com, revealed that "As a matter of resource allocation, the FSA does not, generally speaking, carry out internet sweeps in respect of unauthorised business. The unauthorised business function of the FSA operates on the basis of specific information or complaints received."
61 year old Michael Francis Mawdsley was jailed for 8 years in May, following a trial at Chester Crown Court, for what the judge described as "despicable and disgusting" actions.
Update 12 July: Additional Information Added
Our original story following Mawdsley's conviction generated many comments from Handbridge residents, some of whom knew Mawdsley during the time he lived in Lower Park Road, Queen's Park. We have been told that Mawdsley was quite open about his business dealings and indeed local printing company, Bridgegate Printing, confirmed to us that they regularly printed business cards, brochures and supporting material for his businesses.
The results of our extensive investigation into Mawdsley's business dealings obviously raises fundamental questions about why he was not detected earlier, despite not being registered to act as a financial adviser.
Yellow Pages
Mawdsley's businesses were openly advertised in many public directories including Yellow Pages and internet directories. As part of their compliance checks into tax affairs, HMRC routinely compare public directories against their own databases. Many banks, credit reference agencies and other companies and Government departments do the same.
As Yellow Pages is readily available in electronic form, it would be a relatively straight forward IT process to compare this against the FSA's register and identify potential non-registrants which could then be followed up. So we have to ask, why isn't this task being undertaken regularly? The FSA puts considerable resources into compliance checks on registered businesses, so why can't some of this be reallocated? The fee income from additional registrations and the non-registration penalties would offset the additional costs of this simple check.
Suspicious Employee
Mawdsley was only caught because a vigilant employee became suspicious and went to the Police. It was only then that Mawdsley's activities were investigated.
We asked the FSA, dubbed the "Fundamentally Supine Authority" by Private Eye magazine, when they first became aware of Mawdsley's activities. They declined to do so for "legal reasons".
The FSA also declined to respond to our questions about what action that have taken against any of the companies in which Mawdsley was involved in. According to the BBC North West Tonight's report, one of those companies was "Chester Independent" which is still listed in the FSA Register with no relevant disciplinary action shown.
The FSA's website states that "Under Section 19 [of the Financial Services Act 2000], any person who carries on a regulated activity in the UK must be authorised by the FSA or exempt (an appointed representative or some other exemption). Breach of section 19 may be a criminal offence and punishable on indictment by a maximum term of two years imprisonment and/or a fine".
Life Savings Lost
Our conclusion is that the FSA, by failing in its responsibility to effectively regulate the market, allowed Mawdsley's illegal activities to continue therefore increasing the suffering of Mawdsley's victims, many of whom lost their life savings.
Our advice remains to always independently check that any person or firm you are dealing with, as a financial adviser, is registered with the Financial Services Authority (FSA). Most importantly, enquire about any relevant disciplinary history.
You can search the FSA Register either online, by following this link, or by calling the FSA helpline on 0845 606 1234 (local call rate).
For impartial advice and to report any potentially suspicious activity, you can contact Cheshire West and Chester Council's Trading Standards Department or call Consumer Direct North West on 08454 04 05 06 (local call rate).
Update
Thank you for your comments on this story, please keep them coming.
Some of you have told us that Mawdsley used to drink in the Handbridge pubs, in particular the Carlton and Red Lion, and approach cuctomers as a source of business frequently handing out his business card. One long time Handbridge resident, who was facing imminent redundancy a few years ago, told us:
"Coming up to my redundancy, he [Mawdsley] approached me and offered to help me invest my redundancy money. I'm now very glad that I did not take up his offer. I remember he always appeared flash with money and used to drive a big sports car. That made me suspicious"
Other residents have told us that Mawdsley regularly frequented pubs in Chester City Centre and Ellesmere Port as a means of generating business since the early 1980s.
So we ask again why, if he had been so open about his activities for more than 20 years prior, did it take so long to stop him?
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