DISCIPLINARY POWERS - amount of penalty determined by Interim Tribunal - whether fresh evidence has come to light about ability to pay - whether determination of Interim Tribunal justified in the light of the fresh evidence - whether penalty should be reduced – public censure in the alternative - matter remitted to Authority with directions - Financial Services and Markets Act 2000 ss 66(3), 133 and 426 - 428 - Financial Services and Markets Act 2000 (Transitional Provisions) (Partly Completed Procedures) Order 2001 SI 2001 No 3592 Art 62
THE FINANCIAL SERVICES AND MARKETS TRIBUNAL
- and -
THE FINANCIAL SERVICES AUTHORITY
Tribunal: DR NUALA BRICE (Chairman)
WILLIAM BLAIR QC
CATHERINE FARQUHARSON ACA
Sitting in London on 25 March 2003
The Applicant in person
Mr David Mayhew, instructed by the Respondent, for the Respondent
© CROWN COPYRIGHT 2003
"133(3) On a reference the Tribunal may consider any evidence relating to the subject-matter of the reference, whether or not it was available to the Authority at the material time.
The section continues:
(4) On a reference the Tribunal must determine what (if any) is the appropriate action for the Authority to take in relation to the matter referred to it.
(5) On determining a reference, the Tribunal must remit the matter to the Authority with such directions (if any) as the Tribunal considers appropriate for giving effect to its determination.
(10) The Authority must act in accordance with the determination of, and any direction given by, the Tribunal."
"(1) Where a person in discipline or the Authority is aggrieved by the determination by the interim tribunal of the incomplete disciplinary proceedings to which that person was subject immediately before commencement, that person or the Authority may refer the matter to the Financial Services and Markets Tribunals.
The Article continues:
(2) Section 133 [ie of FSMA 2000] applies to the [Financial Services and Markets] Tribunal when it is considering a reference made under paragraph (1) with the following modifications:
(a) as if subsection (3) provided that on such a reference, the Tribunal may consider only the evidence that was considered by the interim tribunal unless fresh evidence comes to light which could not reasonably have been made available to the interim tribunal by the party now seeking to adduce it;
(b) as if subsection (4) provided that on determining a reference from an interim tribunal the Tribunal must decide whether the determination of the interim tribunal was unlawful or was not justified by the evidence and must remit the matter to the Authority with such directions (if any) as the Tribunal considers appropriate having regard to its decision;
(3) as if subsections (6), (7), (8), (9) and (12) did not apply."
Thus in contrast with the procedures now current, the power under the transitional procedures to admit evidence that was not before the interim tribunal is restricted, and this Tribunal is limited in effect to a review function.
(1) whether fresh evidence has come to light which could not reasonably have been made available to the Interim Tribunal within the meaning of Article 62(2)(a) of the 2001 Order;
(2) whether the determination of the Interim Tribunal was unlawful or not justified by the evidence within the meaning of Article 62(2)(b); and
(3) in remitting the matter to the Authority, what directions (if any) we consider appropriate having regard to our decision, as required by Article 62(2)(b).
Before considering these issues, we should summarise the relevant facts.
The PIA disciplinary proceedings
2000/01 £ 7,019.41
(8 months) £34,250.89
The decision of the Interim Tribunal
"We have no doubt that in the circumstances of this case a fine is appropriate. What has given us greater difficulty is the proper amount of the fine. Like the Authority we start from the view that a fine must be commensurate with the seriousness of the breaches for which an individual has been found guilty. On the other hand, we also have to take account of the individual's ability to pay. We agree with the Committee's assessment of the Appellant's offences. They were serious offences and merited a substantial fine. Our only anxiety has concerned the Appellant's ability to pay a fine of the amount of £50,000. The Tribunal asked the Appellant to give some indication of his present means but we have to say that the answers he gave were vague; we take into account in deciding the appropriate figure the fact that he did admit when interviewed by the Authority that over two years he had benefited from the receipt of about £40,000 commission from policies arranged by Chartertrack."
There followed in the decision a reference to the proceedings instituted by the Applicant against Carpenters, and the possibility that money that might come from that. In all the circumstances, the Interim Tribunal considered that the penalty of £50,000 proposed by the Disciplinary Committee was too high, but that he was in a position to pay a substantial fine, and that the appropriate fine was £40,000.
Directions given about evidence as to means
The effect of the transitional provisions
"The crux of the case is not what might have happened had [the Applicant] acted differently, but whether what he did was in accordance with the duties imposed on him by the Authority to act with integrity and good faith with everyone and, in particular, to keep the Regulator informed. Thus, although we accept that [the Applicant] was in no way responsible for the original mis-selling, nevertheless we cannot agree with him that there was no consumer protection issue involved. It is, as we have said, of the utmost importance to consumers that Regulators are kept fully in the picture in circumstances of this kind. The purpose of appointing a regulator is that it does not rest solely with a financial adviser to decide what course should be taken in any given circumstances. What the Regulator might have done had he been told is really beside the point. The Regulator had no opportunity to consider what to do because of [the Applicant's] breach of duty."
As the Interim Tribunal said, these were serious matters. In a sentence, the Applicant disposed of his company's assets to defeat pension mis-selling claims, and then sought to conceal the position from the regulators. Whatever his motivation may have been, like the Interim Tribunal, we consider that these matters merited a substantial financial penalty. Again like it, our only anxiety has concerned the Applicant's ability to pay. Unlike it however, we have seen the evidence of his means contained in the Schedules of November 2001, and of course of January 2003.
DR NUALA BRICE
WILLIAM BLAIR QC
13 June 2003