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A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11Darren Lee Newton was prohibited by the Financial Conduct Authority (FCA) on 20 December 2018 after the regulator found that he had shown a serious lack of honesty and integrity while running First Step Finance Limited.
The case concerned payments made from First Step’s office account to the company’s former owner. That account contained commingled business funds and customer money. The payments totalled £322,500, while First Step’s recorded client-money shortfall had grown to more than £7.1 million by the time the company entered administration.
What the FCA prohibition means
The FCA used its powers under section 56 of the Financial Services and Markets Act 2000 (FSMA) to prohibit Newton from performing any function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional firm.
That is a financial-services prohibition order. It is broader than a restriction on working as a debt adviser and is not the same thing as a Companies House director disqualification. The FCA’s finding was that Newton was not a fit and proper person because his conduct demonstrated a serious lack of honesty and integrity.
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The FCA did not impose a financial penalty or fine on Newton in the Final Notice. The formal action was the prohibition order.
What happened at First Step Finance
First Step operated a “full and final settlement” debt-management model. Customers made monthly payments to the firm. After permitted fees, the money was supposed to be retained for customers’ benefit, used to make settlement offers to creditors, or returned to customers.
First Step had a client account, but customer payments continued to be paid into its office account. The company’s own funds and customer funds were therefore mixed together. Although First Step periodically made transfers, known as “sweeps”, the FCA said those transfers did not move all the money that should have been held for customers.
The FCA recorded the following client-money shortfalls:
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| Date | Recorded shortfall |
|---|---|
| 30 November 2010 | £1,687,838 |
| 30 November 2011 | £3,869,472 |
| 30 November 2012 | £5,761,943 |
| 31 October 2013 | £6,119,716 |
| 28 May 2014 | £7,156,036 |
Newton became First Step’s sole director on 18 October 2013. The company entered administration on 28 May 2014. At that point, it should have been holding client money for more than 4,000 customers. The FCA said no dividend was paid to creditors in the administration and customers had not received the money First Step should have held in a segregated account.
The payments to First Step’s former owner
Newton was also the sole director and shareholder of D Newton Limited. That company bought First Step’s shares from Christine Whitehurst for an agreed price of £480,000.
The agreed deferred consideration was seven monthly payments of £20,000, totalling £140,000, from November 2013 to May 2014. However, the FCA found that First Step—not D Newton Limited—made payments to Whitehurst totalling £322,500 between 26 November 2013 and 16 May 2014.
| Month | Transferred to Whitehurst |
|---|---|
| November 2013 | £40,000 |
| December 2013 | £45,000 |
| January 2014 | £62,500 |
| February 2014 | £20,000 |
| March 2014 | £55,000 |
| April 2014 | £30,000 |
| May 2014 | £70,000 |
| Total | £322,500 |
The May total consisted of £20,000 paid on 15 May 2014 and £50,000 paid on 16 May 2014. Newton first met the proposed administrators on 19 May, three days after the £50,000 transfer. First Step entered administration nine days later.
Why the FCA considered the conduct dishonest
The FCA’s finding was not simply that First Step had poor accounting controls. It concluded that Newton:
- knew the company had a client-money shortfall of more than £6 million;
- knew customer money could only be used for customers’ benefit;
- intended First Step, rather than D Newton Limited, to make the payments to Whitehurst;
- knew First Step would have to use client money to make those payments; and
- directed or allowed payments at more than twice the contractual monthly rate, including the £70,000 transferred shortly before the administrators’ meeting.
The FCA described the £322,500 as money transferred from an account containing commingled funds, some or all of which was client money. That wording matters: it is more precise than saying that every pound of the £322,500 was proven to be customer money.
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On those facts, the regulator found a serious lack of honesty and integrity and considered Newton a serious risk to consumers.
First Step’s regulatory background
First Step received an Office of Fair Trading (OFT) consumer-credit licence on 26 November 2007 for debt counselling and debt-adjusting activities.
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1Fix the driver behind crashes, sound loss and screen glitches2Clear out junk files and repair common Windows errors3Scan for outdated or missing drivers - takes under a minuteOn 14 November 2012, the OFT issued a determination to revoke the licence. Its findings included deceitful, oppressive, improper and unfair business practices. First Step withdrew its appeal to the First-tier Tribunal on 27 July 2013. The licence was revoked on 29 July 2013, although First Step could continue licensed activities subject to requirements until 4 p.m. on 18 October 2013.
Consumer-credit regulation transferred from the OFT to the FCA on 1 April 2014. The FCA stated that First Step did not hold an OFT licence on 31 March 2014 and therefore did not receive interim permission under the transfer arrangements.
A proposed transfer of First Step’s customers to Debt Help and Advice Limited after the October 2013 acquisition did not take place. First Step continued to receive payments from existing customers until it went into administration.
Why the timing of the FCA decision matters
The FCA announced its Decision Notice in March 2018. Newton referred the matter to the Upper Tribunal on 16 April 2018, which meant the prohibition did not immediately take effect while the reference was pending.
The Upper Tribunal struck out the reference on 5 October 2018 for non-compliance with the Tribunal Procedure Rules. The FCA said no application to reinstate the reference was received by the 14 December deadline. It then issued the Final Notice on 20 December 2018, making the prohibition operative.
It is therefore inaccurate to describe the prohibition as still pending before the Upper Tribunal. That was the position at the time of the earlier Decision Notice, not the final outcome.
What consumers should take from the case
The case illustrates why debt-management customers should check how a firm handles client money, not just whether it advertises a low fee. Important warning signs include:
- Unclear payment arrangements. A firm should explain where customer payments are held and how money is passed to creditors.
- Requests to pay into an ordinary business account. Customers should ask why payments are not being protected separately where client-money rules require segregation.
- Pressure to keep paying after regulatory problems. Check the firm’s status on the FCA Financial Services Register before sending further money.
- Unexplained delays or missing creditor payments. Keep bank statements, payment schedules, creditor correspondence and statements from the debt-management company.
The FCA Register is the authoritative source for checking firms and individuals currently or previously authorised or approved by the FCA or PRA, including regulatory-action information. A person’s present status should be checked there rather than inferred from an old news report or Decision Notice.
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FAQ
Was Darren Newton fined by the FCA?
No. The FCA’s Final Notice records a prohibition order. It does not impose an FCA financial penalty or fine on Newton.
How much money did First Step Finance pay to Christine Whitehurst?
The FCA found that First Step transferred £322,500 to Whitehurst between November 2013 and May 2014. This was not the same as the £480,000 agreed purchase price for First Step’s shares.
Was all of the £322,500 definitely customer money?
The FCA said the payments came from an office account containing commingled company funds and customer funds, and that some or all of the money was client money. The precise wording should not be expanded into a claim that every pound was proven to be customer money.
Was Newton only prevented from acting as a company director?
No. The FCA prohibition was made under section 56 FSMA and covered performing any function in relation to regulated activities carried on by an authorised person, exempt person or exempt professional firm. It was not simply a Companies House director disqualification.
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When did the FCA prohibition take effect?
The FCA issued the operative Final Notice on 20 December 2018. Newton’s Upper Tribunal reference had been struck out on 5 October 2018, and the FCA said no application to reinstate it was received by the 14 December deadline.
Was First Step Finance FCA-authorised when the payments were made?
The FCA stated that First Step did not hold an OFT licence on 31 March 2014 and did not receive FCA interim permission. Its earlier OFT licence and its regulatory position after the transfer to FCA supervision should be distinguished.
The Bottom Line
The FCA prohibited Darren Lee Newton after finding that he knowingly directed or allowed First Step Finance to use money from an account containing client funds to pay the company’s former owner. The transfers totalled £322,500, while First Step’s recorded client-money shortfall reached £7,156,036 when it entered administration. The action was a prohibition order for serious dishonesty and lack of integrity—not an FCA fine and not merely a ban on serving as a company director.
Regulatory status can change. Check the FCA Financial Services Register for the latest information before relying on any current-status claim.
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