Watchdog slaps ban on former Cattles’ directors

The Financial Services Authority has also publicly censured Batley-based Cattles and its subsidiary Welcome Financial Services.

The group lent money to cash-strapped households. It was brought to its knees by a long-running accountancy scandal, which saw its proportion of bad debts understated for years.

James Corr, Cattles’ finance director, has been fined £400,000 and Peter Miller, Welcome’s finance director has been fined £200,000, and both have been banned from performing any functions in areas the FSA regulates.

The authority has also banned John Blake, Welcome’s managing director, and fined him £100,000. He has referred his case to the Upper Tribunal. The FSA said all three fines had been reduced “on account of the directors’ current personal financial circumstances”.

Cattles was a member of the FTSE 250 but delisted last year. Most of its business was conducted through its subsidiary, Welcome. According to the FSA, Cattles’ 2007 annual report contained “highly misleading arrears, impairment and profit figures”.

It stated that only £900m of Welcome’s approximately £3bn loan book was in arrears, when if, accounting standards had been properly applied, the figure would have been around £1.5bn. Cattles also announced a pre-tax profit of £165.2m for 2007, but if the correct accounting standards had been used, Cattles would have suffered a pre-tax loss of £96.5m.

The FSA continued: “The misleading figures from the annual report were also included in a rights issue prospectus that Cattles released to potential investors in April 2008. It gave misleading impressions of the firm’s financial health. It is likely that investors would have regarded this as highly material when subscribing under the rights issue. The rights issue was subsequently fully subscribed and raised £200m. When the true state of Cattles’ loan book emerged in 2009, trading in Cattles’ shares was suspended.”

In March 2011 Cattles announced a scheme of arrangement under which its shareholders would receive only 1p for each share, compared with a rights issue price of £1.28.

In a statement, Mr Corr said he was “deeply disappointed that the FSA, concluding there was no dishonesty or deliberate wrongdoing on my part, has nevertheless decided to take action against me.

“I firmly believe that criticisms levelled against me remain unfair, specifically the challenge to my integrity. This is particularly the case where any shortcomings found by the FSA in relation to Cattles’ financial statements were not found to be the result of any deliberate misconduct on my part and were not identified by others in Cattles’ senior team or its internal or external auditors.”

Mr Corr said he cooperated fully with the FSA investigation at all times. He added: “As a result of the regulatory decision committee’s consideration of the matter, the FSA’s proposed fine in relation to me was materially reduced, and a further reduction was then made to take into account the severe financial hardship that a significant fine would cause me.

“I remain deeply saddened by the impact that Cattles’ financial problems have had on the various stakeholders in the Cattles’ business.”

A Cattles spokesman said: “Cattles’ questioning played a significant role in bringing the impairment issue to light in February 2009 and it immediately informed the market and the regulator. Since then, the companies have cooperated fully with the FSA’s investigation, and we are pleased that the FSA has expressly acknowledged this in its own press release. Over the last three years, new management teams have been put in place at both Cattles and Welcome, to stabilise the companies and restructure their operations and finances.”

The spokesman said Nottingham-based Welcome was continuing to collect out its loan book. While Cattles is no longer trading, its Shopacheck and TLG businesses continue to be developed.

Shopacheck is based in Batley, while TLG’s head office is in Cleckheaton. Welcome, Shopacheck and TLG employ 1,700 staff altogether.

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