Finance director who used clients money to buy firm has been banned

The finance director of a collapsed debt management company that was used by a couple to fund their luxurious lifestyle has been banned by the City watchdog.

Adrian and Christine Whitehurst set up Stockport based First Step Finance in 2007 and the firm went bust seven years later with debts of £7m.

First Step’s clients were largely vulnerable individuals who went to the firm for help to pay off their debts.

The Financial Conduct Authority (FCA) has ruled that Darren Newton showed a “serious lack of honesty and integrity” by using client money to buy the company from Mrs Whitehurst in 2013.

The FCA said he was aware the money “should only have been used to pay customers’ creditors or to be returned to customers” but still gave the cash to Mrs Whitehurst.

The FCA added that Mr Newton was supposed to transfer the group’s 4,000 clients to another company after his purchase of the business but the transfer never took place.

Mr Newton is disputing the FCA’s decision and has referred the matter to the Upper Tribunal.

The watchdog banned Mr and Mrs Whitehurst from working in the industry last October.

They received monthly payments from their customers but used the money to fund a luxury 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.

The Whitehurst’s were disqualified as company directors for a combined 24 years.

The couple withdrew client funds of £5,943,939 from the company, in breach of consumer credit regulations, and treated it as directors’ drawings.

The company had its operating licence removed in October 2013 after the Office of Fair Trading identified “serious concerns” about the transparency and integrity of its practices.

Adrian Whitehurst, a director from October 2007 to July 2009 and Christine Whitehurst, who succeeded him from July 2009 to October 2013, were banned for 10 and 14 years respectively.

Following the resignation of Christine Whitehurst the former finance manager Darren Newton acquired the company and became its sole director.