John Lepine, a director of Barking-based specialist intermediary First Class Mortgages, is thought to be one of the first individual industry practitioners to have a ‘prohibition order’ imposed on them by the regulator.
The ban, which came into force on December 22 2006, prohibits Lepine from performing any function in relation to any regulated activity. First Class Mortgages is a sub-prime specialist, originating about £180m of mortgage and secured loans business for its lender panel.
Lepine, who is a co-owner of the company, was given a three-year jail sentence in November 1989 at the Inner London Crown Court after being found guilty of conspiracy to obtain property by deception. The Court of Appeal ratified his conviction in 1990.
At his appeal hearing, Lepine was described as committing “a serious fraud of a kind which does the City great harm”. The offence took place during a period when Nomura Bank International employed Lepine as a foreign exchange trader.
Yet despite serving a jail term, Lepine failed to declare his conviction to the FSA when First Class Mortgages applied to be a directly authorised firm in 2004.
According to the FSA, Lepine also failed to disclose his conviction on other occasions. When asked if he had made full disclosure of his conviction in applying for a licence under the Consumer Credit Act, Lepine confirmed that he had not.
The Office of Fair Trading has confirmed to Mortgage Strategy that it is conducting its own investigation into First Class Mortgages and is currently considering its credit licence.
In its final notice to Lepine, the FSA says: “The prohibition order arises from Mr Lepine’s conduct while employed by Nomura Bank International. Mr Lepine was convicted on November 16 1989 at the Inner London Crown Court of conspiracy to obtain property by deception and received a custodial sentence.
“When we asked Mr Lepine about the non-disclosure of his conviction, he gave an account of the matter which does not accord with either the offence for which he was convicted, nor with the terms of the judgment of the Court of Appeal.”
Industry insiders are not surprised by the developments. They describe Lepine’s case as a time bomb that is set to blow up in the industry’s face.
The owner of one of the UK’s biggest brokerages, who wished to remain anonymous, says: “John Lepine is the tip of the iceberg. The industry knows it. So does the FSA.
“I am aware of enquiries that are underway into the affairs of other prominent people in the industry who may have had momentary memory lapses when they were applying for authorisation.”
Lepine was unavailable for comment when Mortgage Strategy contacted the Barking offices of First Class Mortgages.
In an attempt to defend the non-disclosure of his conviction, Lepine told the FSA that he “had a moment of denial”. He also said that he was concerned that if he did not receive authorisation “First Class Mortgages may close and up to 60 employees may lose their jobs”.
However, a spokesman for the FSA says the ban is indefinite and Lepine, after a period of time, will be able to reapply for authorisation if he can prove he is a fit and proper person.