Between them, the Whitehursts ran First Step Finance, a debt management company licensed by the Office of Fair Trading (OFT) from 2007 to 2013, until the OFT revoked First Step’s licence taking effect in October 2013. The OFT found that First Step had deceitful, oppressive, improper and unfair business practices. The FCA took over the regulation of consumer credit in April 2014 and has now banned the Whitehursts from any involvement in regulated financial services activity. The FCA has also referred the Whitehursts to the City of London Police, who are considering the matter.

First Step’s clients were largely vulnerable individuals who went to the firm for help to pay off their debts.  The firm told customers that it would build a ‘pot’ of money for each customer and that it would use this ‘pot’ to make a full and final settlement of their debts with the customer’s creditors. First Step received monthly payments from their customers, who were told that the money would be held in a ring-fenced account (as required by the OFT). 

However, the Whitehursts in fact used clients’ money to fund their businesses and a luxurious lifestyle.  They spent over £500,000 on holidays, bars and restaurants, including stays at five-star luxury hotels in Marbella, Venice, Vienna and Greece; over £200,000 on luxury motor vehicles, including a Bentley, a Range Rover and a Ducati; and significant sums on luxury brands, including goods from Hermes and Louis Vuitton. Over £1m of cash was transferred to Mr Whitehurst for his personal use. In addition, over £1m of client money was used for the benefit of firms associated with the Whitehursts and over £2.2m of client money was used to fund First Step’s expenses.

The firm’s customers are unable to recover their money as these losses are not covered by the Financial Services Compensation Scheme, and as such were left with continuing debts.

Mark Steward, Executive Director of Enforcement and Market Oversight, said: “The Whitehursts were trusted by their customers, who were extremely vulnerable, to help them with their debt problems. They abused this trust, living a luxury lifestyle at the expense of people who could not afford to lose their money.

They showed complete disregard for the consequences of their actions and we have taken the strongest action possible in preventing them from operating in financial services again.”

The ban imposed by the FCA is the strongest sanction available in this case, as the Whitehursts’ conduct took place before the responsibility for regulation of consumer credit was transferred to the FCA.

The FCA has consistently focused on debt management as a high-risk area for consumers since 2014, and a large number of firms have left the market in that time, while others have taken steps to improve their practices and processes to meet the standards required.  To date, no firm operating the ‘full and final settlement’ model used by First Step has been authorised by the FCA.

Notes to editors

  1. Final Notice for Adrian Whitehurst.
  2. Final Notice for Christine Whitehurst.
  3. Consumers who need advice on managing their debts can contact the Money Advice Service, a free and impartial service set up by the government. You can contact them online at https://www.moneyadviceservice.org.uk/debt or by phone on 0800 138 7777. Calls cost no more than to a standard UK-wide number.
  4. The FCA published information for First Step Finance customers in May 2014 when the firm went into administration. This advised them to stop making payments to the firm and provided links to organisations that could provide free debt advice. The FCA also contacted creditor organisations to ensure they were aware of the situation and that they treated FSF customers with appropriate forbearance.
  5. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  6. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  7. Find out more information about the FCA.

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