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Polar Insight

Hunter Jones in the High Court: the FCA's unauthorised business escalation

The FCA has issued High Court proceedings against Osborne Baldwin Limited, trading as Hunter Jones, alleging unauthorised regulated activity in the sale of loan notes and seeking investor restitution. The move signals a more litigious posture on perimeter breaches that authorised firms, distributors and professional advisers cannot ignore.

The FCA has taken Osborne Baldwin Limited, trading as Hunter Jones and Hunter Jones Group, to the High Court over alleged unauthorised regulated activity in the sale of loan notes, asking the court both to halt the activity and to require money to be returned to investors (FCA). The claim is at an early stage with no trial date set, but the choice of forum matters as much as the pleadings.

Key Executive Takeaways

  • The FCA is using High Court proceedings, not just public warnings, to shut down alleged unauthorised loan note activity and claw money back for investors.
  • Authorised firms that touch unauthorised issuers through distribution, custody, payments or advice face heightened perimeter and Consumer Duty exposure.
  • Boards should re-examine counterparty due diligence on non-standard credit products before the FCA's next enforcement wave rather than after it.

A shift from warning list to writ

For most of the last decade, the FCA's principal tool against suspected unauthorised firms has been the Warning List and consumer alerts, supplemented by occasional criminal referrals. Civil proceedings under section 380 and section 382 of FSMA, seeking injunctions and restitution, have been used sparingly. The Hunter Jones claim, filed on 21 September, indicates the regulator is now willing to commit litigation resource to perimeter cases involving retail loan notes (FCA). That is a meaningful reallocation given the cost and evidential burden of contested High Court work.

The product category is not incidental. Non-transferable, illiquid loan notes marketed to retail investors have been a recurring source of consumer harm, sitting awkwardly across the financial promotions regime, the high-risk investment rules and the unauthorised deposit-taking prohibition. By pursuing restitution rather than only injunctive relief, the FCA is signalling that consumer redress, not just market cleansing, is the objective. That framing lines up with the Consumer Duty's outcomes orientation and gives the regulator a template it can reuse.

Second-order exposure for authorised firms

The more uncomfortable question for regulated executives is what sits adjacent to firms like Hunter Jones. Loan note structures typically involve authorised introducers, payment service providers, SIPP operators, ISA managers, corporate finance advisers and, occasionally, custodians. Each of those relationships now carries elevated regulatory and reputational risk if the FCA succeeds in characterising the underlying activity as unauthorised. Restitution orders can pull in third parties who were knowingly concerned, and even where legal liability is remote, supervisory scrutiny and Consumer Duty questioning will follow.

This lands alongside a broader FCA push into consumer protection. The regulator this week also announced a cross-sector effort on protection insurance, citing that around 58% of adults have no life insurance, critical illness cover or income protection, and that 59% of that group has never considered it (FCA). The common thread is a regulator willing to intervene actively where it judges markets are failing consumers, whether through litigation or industry orchestration.

What boards should do now

Three practical steps follow. First, map exposure: any authorised firm that has processed payments for, distributed, custodied or advised on Hunter Jones products should establish the facts before receiving a section 165 request. Second, revisit onboarding and ongoing monitoring of non-standard credit issuers, particularly those relying on exemptions or offshore structures. Third, treat the High Court filing as a template. If the FCA prevails, expect a pipeline of similar claims and consider whether current governance around perimeter-adjacent business would withstand disclosure.

The Warning List era is not over, but it is no longer the ceiling of FCA ambition. Firms whose commercial models depend on proximity to the perimeter should assume the regulator now has both the appetite and the forum to test it.

Sources

What this reveals

The Hunter Jones claim exposes a recurring blind spot: authorised firms tend to assess perimeter risk based on their own permissions rather than the full chain of counterparties, introducers and product originators they touch. Boards often assume that if a distributor, SIPP operator or payment partner passed onboarding checks, the underlying activity is someone else's regulatory problem. That assumption is now materially weaker, because the FCA is willing to pursue restitution through the courts and to pull in parties who were knowingly concerned. Other leadership teams may wrongly believe that a clean Warning List check or a compliant financial promotion sign-off insulates them from being drawn into the next enforcement wave.

Questions accountable leaders should ask

  • 01When did we last re-test the regulatory status of the issuers, introducers and product originators sitting behind the non-standard credit or illiquid investment products we distribute, custody or facilitate payments for?
  • 02If the FCA characterised one of our counterparties' activities as unauthorised tomorrow, could we evidence the due diligence, challenge and escalation that led us to accept the relationship, and would that record hold up under Consumer Duty and section 382 scrutiny?
  • 03Who inside the firm owns the perimeter question for adjacent unauthorised activity, and is that person seeing the same counterparty information that sales, onboarding and finance see?
  • 04Where are our internal assumptions about 'someone else's regulatory problem' most likely to have drifted from what the FCA now expects of authorised firms sitting in the chain?
  • 05Have we tested our exposure to loan note structures, non-transferable securities and similar retail products against both the high-risk investment rules and the deposit-taking prohibition, not just the financial promotions regime?

What accountable leaders should do now

  1. 1Commission a rapid perimeter exposure review covering every counterparty relationship that touches non-standard credit, loan notes or illiquid retail investment products, with named accountability at SMF level.
  2. 2Reconstruct the due diligence and ongoing monitoring record for those relationships and test whether it would satisfy a supervisor asking why the firm continued to facilitate the activity.
  3. 3Bring the findings to the board with a clear view of which relationships to exit, which to restructure and which to defend, and record the reasoning in a way that survives hindsight review.
  4. 4Update Consumer Duty outcomes monitoring and financial crime MI to flag adjacency to unauthorised or perimeter-adjacent activity as a distinct risk indicator, not a subset of general counterparty risk.
  5. 5Open a controlled dialogue with the supervisory team on the firm's perimeter posture before the next enforcement action forces a reactive conversation.

Explore the practical guide

This guide explains how FCA regulated firms should identify, assess and manage stakeholder risk in a way that stands up to supervisory scrutiny and board challenge. After reading, senior leaders will know how to build a stakeholder risk framework that connects to Consumer Duty, SMCR accountability and operational resilience obligations.

Read the guide

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