Press release: Cold-calling director disconnected

The Secretary of State for Business, Energy and Industrial Strategy accepted a disqualification undertaking from Mr Abbott on 6 December 2017 for a period of 12 years, which commenced on 27 December 2017.

Mr Ray was a director of Reactiv Media Ltd, a Halifax-based marketing company which made unsolicited calls for direct marketing purposes and stated it owned and maintained one of the largest databases for UK consumers, being able to target campaigns for various entities from sole traders’ to blue-chip organisations.

The company went into liquidation on 8 April 2016 with estimated creditor claims totalling over £2 million.

Mr Abbott has not disputed that he had failed to ensure that Reactiv Media:

• provided accurate information in a Leeds City Region Enterprise Partnership grant application, leading to an unmerited payment of over £33,000
• complied with its responsibilities under the Privacy and Electronic Communications (EC Directive) Regulations 2003 and The Conduct of Authorised Persons Rules 2014, leading to an unpaid penalty of £75,000 and cancellation of authorisation to provide claims management services.
• did not trade to the unreasonable risk and ultimate detriment of HM Revenue & Customs and to his benefit, while it was insolvent

Commenting on the disqualification, David Brooks, Group Leader at The Insolvency Service, said:

There are 3 distinct allegations underpinning this disqualification. As a whole, they show a director who flagrantly breached his duties to regulators and company creditors over an extended period. The privilege of limited liability status should be removed from such individuals.

Facts of this case, which were particularly disquieting, were the £252,071 of personal spending on deposits for two houses in the very month that the unjustified grant funds were given to the company, and the nature of some of the £177,664 of identified personal benefits taken from 1 September 2015: This included at least £55,000 spent on jewellery and Mr Abbott’s wedding.

Andy Curry, ICO Enforcement Group Manager said:

This latest disqualification of a company director is another welcome step towards stopping the scourge of nuisance calls.

The ICO has made it clear we’re committed to recovering the fines we issue on behalf of taxpayers and those millions of people who have been hounded by unwanted calls. If the fine remains unpaid we work with the Insolvency Service to pursue all the options. We are pleased this person can’t run or be involved in the management of another company which has the potential to make nuisance calls to members of the public.

Notes to editors

Reactiv Media Ltd (Company Reg No. 06252030) was incorporated on 18 May 2007 and latterly traded from Elant House, Old Power Way, Lowfields Business Park, Elland, W Yorks, HX5 9DE.

The Company went into liquidation on 8 April 2016, with an initially-estimated deficiency as regards creditors of £2,363,148.

Tony Ray Abbott’s date of birth is May 1971 and he resides in Surrey.

The Secretary of State accepted a Disqualification Undertaking from Mr Abbott for a period of 12 years on 6 December 2017. The disqualification commenced on 27 December 2017.

The matters of unfitness, which Mr Abbott did not dispute in the Disqualification Undertaking, were that:

I failed to ensure that Reactiv Media Ltd (Reactiv Media) provided accurate information in an application to The Leeds City Region Enterprise Partnership (LEP) for a Business Growth Programme Grant, leading to a grant payment from that programme of £33,941 on 17 March 2015, which Reactiv Media was not legitimately due

I had signed an acknowledgement of the offer of a grant by LEP on 6 May 2014, agreeing that Reactiv Media would be bound by the offer and would comply with all such terms and conditions. These included a term that all information provided in respect of a grant application must be full, complete and true; to aid detection and prevention of fraud so that public funds were protected.

On 24 February 2015, a claim report was completed by Reactiv Media claiming a £50,000 grant, based on 10% of total applicable expenditure of £500,000. Invoices totalling £459,610 were scheduled and attached to the claim received by the LEP. The invoices (before VAT) totalled £383,420.

The schedule includes three invoices from January 2015, of which copies provided to the LEP were signed by me, which total £339,418 before VAT. The grant was based on 10% of the net value of eligible invoices supplied, so the 3 invoices represented £33,941 of the claim.

These three invoices are not reflected in the company purchase ledgers, the sales ledgers of the two suppliers concerned and the suppliers have confirmed that they did not issue any such invoices.

LEP paid Reactiv Media £38,326 on 17 March 2015. During March 2015, net payments were made by Reactiv Media for my benefit totalling at least £252,071.

I failed from at least 12 November 2012 to 2 December 2015 to ensure that Reactiv Media complied with its responsibilities under the Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR) and The Conduct of Authorised Persons Rules 2014 (CAPR), leading to an unpaid penalty of £75,000 and cancellation of authorisation to provide claims management services.

On 24 July 2014, The Information Commissioner’s Office (ICO) issued a Monetary Penalty Notice for £50,000 in respect of Reactiv Media’s contraventions of regulation 21(1)(b) of PECR, after satisfying itself that Reactiv Media had used, or instigated the use of, public telecommunications service for the purpose of making 601 unsolicited calls for direct marketing purposes to subscribers, where the number allocated to the subscriber in respect of the called line was listed on the Telephone Preference Service register of numbers kept by OFCOM in accordance with regulation 26 PECR. The 601 complaints were received from 12 November 2012 to 31 December 2013. The fine was increased to £75,000 by a First-Tier Tribunal on 13 April 2015. Reactiv Media made no payments towards the penalty.

On 11 July 2016, The Claims Management Regulation Unit of The Ministry of Justice (CMRU) cancelled Reactiv Media’s authorisation to provide claims management services. This was subsequent to identifying material breaches of the CAPR.

Nine of 227 calls on 5 October 2015 reviewed by the CMRU were dispositioned incorrectly as “not interested” despite the client expressing a desire not to be contacted again, in breach of Client Specific Rule 4 and Rule 1.2 of the Direct Marketing Association’s Code.

Of 100 calls, supplied to the CMRU on 2 December 2015, 35 contained misleading statements, in breach of Client Specific Rule 1c), 2 calls breached Client Specific Rule 1e) regarding prioritising the interests of clients where advice was given, and 2 calls were in breach of the Client Specific Rule 7 regarding use of the expression “no win no fee”.

I caused or allowed Reactiv Media to trade from 1 September 2015 to March 2016, when I knew (or ought to have known) that it was insolvent, to the unreasonable risk and ultimate detriment of HMRC and to my benefit.

Reactiv lost its contract with its principal customer, representing c. 70% of its turnover, in August 2015. Draft accounts for 31 May 2015 set out net assets of £415,668 but, after removal of a bad or doubtful debt of £705,196 owed by an insolvent associated company, it had net liabilities of £289,528.

Only two payments totalling £40,156 were ever made in respect of liabilities owed to HM Revenue and Customs (HMRC) in respect of PAYE/NIC for 2015/16 of £332,821. These were insufficient to even repay the April 2015 return period of £43,361, due for payment in full by 22 May 2015. There were no payments after 10 July 2015, despite a Time To Pay agreement in August 2015 which was then immediately defaulted upon.

From 1 September 2015, Reactiv Media incurred further PAYE/NIC liabilities to HMRC of at least £155,701.

In comparison, in the same period, Reactiv Media made net cash transactions to my benefit totalling at least £177,664, wrote off a loan owed by an company associated to me of £14,670, and transferred both an investment in that company valued at £75,000 and a further debt it owed of £93,550 to associated third parties

A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:

• act as a director of a company
• take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
• be a receiver of a company’s property

Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

Persons subject to a disqualification order are bound by a range of other restrictions.

The Insolvency Service, an executive agency sponsored by the Department for Business, Energy and Industrial Strategy (BEIS), administers the insolvency regime, and aims to deliver and promote a range of investigation and enforcement activities both civil and criminal in nature, to support fair and open markets. We do this by effectively enforcing the statutory company and insolvency regimes, maintaining public confidence in those regimes and reducing the harm caused to victims of fraudulent activity and to the business community, including dealing with the disqualification of directors in corporate failures.

BEIS’ mission is to build a dynamic and competitive UK economy that works for all, in particular by creating the conditions for business success and promoting an open global economy. The Criminal Investigations and Prosecutions team contributes to this aim by taking action to deter fraud and to regulate the market. They investigate and prosecute a range of offences, primarily relating to personal or company insolvencies.

The agency also authorises and regulates the insolvency profession, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.

Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.

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