Court quashes FSA decision notice – Judicial review of a decision made by the FSA’s Regulatory Decisions Committee (RDC) succeeded because the RDC failed to give adequate reasons for its decision and rejecting an individual’s submissions.
This is an interesting decision since judicial review proceedings against the FSA rarely succeed but the FSA is likely to take action to avoid similar cases in the future.
An individual (C) held a significant influence function at a bank in 2008 during the financial crisis. The FSA commenced an enforcement action against C for breaches of Statement of Principle 6 of the Statements of Principle for Approved Persons (requirement to use due skill, care and diligence in managing the business of a firm).
In particular, the allegations included a failure to ensure that the Board was provided with adequate information and failure to ensure that effective systems and controls were put in place to assess and mitigate risks.
The RDC upheld the allegations.
C challenged the RDC’s decision
- on the basis that it upheld the allegations without giving adequate reasons for rejecting C’s written and oral submissions and without taking account of concessions made by FSA enforcement staff.
The High Court
- granted the application for judicial review,
- quashed the decision and
- referred the matter back to the RDC for fresh consideration:
This judicial review application is not intended to undermine the statutory enforcement regime.
- The judge expects very few applications for judicial review to succeed and the FSA can avoid similar cases by the RDC providing “full and proper reasons” for a decision. Adequate reasons are important to allow the subject of enforcement to make an informed decision as to whether to accept or challenge the findings of the RDC; and
- contrary to the FSA’s submission that a referral to the Upper Tribunal is an adequate alternative remedy to judicial review, a referral to the Upper Tribunal is viewed as not equally effective or convenient and less suitable for determining the issue relating to the decision. The Upper Tribunal has no jurisdiction to require the RDC to give adequate reasons for a decision; the Upper Tribunal can make recommendations for the future but not correct the wrong of providing inadequate reasons.
A copy of the judgment is available.
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