DFSA fines rep office US$105,000 for exceeding licence

Chris Hamblin

25 February 2020

Enness engaged in unauthorised activity outside the scope of its representative office licence betwen November 2017 and January 2019. Enness agreed to settle the matter at an early stage, so the DFSA has decided to reduce the fine by a settlement discount of 30%. It would otherwise have been US$150,000.

In the aforementioned period, Enness DIFC arranged mortgages on behalf of HNW clients and provided mortgage advice, thereby going beyond the terms of its licence. The DFSA became aware of this when it conducted an onsite inspection in January last year. The reason for the inspection (possibly routine) is unknown.

Enness Limited is a mortgage broker based out of London and regulated by the UK Financial Conduct Authority, and with offices in the DIFC. Its activities include:

arranging mortgage finance for clients secured against real estate;
dealing with high-net-worth individuals who own or purchase high-end real estate; and
obtaining mortgage finance from numerous lenders in the UK and abroad.

Enness DIFC, a branch of Enness Limited, was licensed on 8 October 2017 by the DFSA to carry on the financial service of operating a representative office in the DIFC. Such an office is only permitted to carry on a very narrow set of activities relating to the marketing of financial services or financial products offered in a jurisdiction outside the DIFC.

In its application for a licence, Enness DIFC purported that its activities were to be strictly limited to:

promoting and marketing Enness Ltd’s mortgage-related services;
meeting existing and prospective clients to provide information on the mortgage services offered by Enness Limited and the way in which it calculates fees;
holding marketing events and seminars;
referring interested potential clients to Enness Limited; and
collecting and sending know-your-customer (KYC) information for existing and prospective clients of Enness Ltd to Enness Ltd.

Enness was held to have broken Articles 41(1) and 42(4)(a) Regulatory Law.