UT (Tax & Chancery) UT-2023-000064 - [2024] UKUT 00394 (TCC)

Section 133 (4) FSMA provides:

“The Tribunal may consider any evidence relating to the subject matter of the reference or appeal, whether or not it was available to the decision-maker at the material time.”

In a number of cases over the years, the Tribunal has considered the width of this jurisdictional gateway. When authorised firms or individuals refer decisions of the Authority made against them to the Tribunal, the Tribunal can only consider “the matter” referred to it.  There has been some past uncertainty as to what this includes, especially where the Authority seeks to include new allegations in its case that were not part of its original statutory notices (warning, decision or supervisory), or considered by the Regulatory Decisions Committee (“RDC”), which is the decision-maker of the Authority on contested Enforcement cases.

In FCA v BlueCrest Capital Management LLP [2024] EWCA Civ 1125 the Court of Appeal determined that s 133(4) creates a very wide gateway. Popplewell LJ, who gave the leading judgment, said this at [201] to [203] of the judgment:

“201.

The FCA’s secondary case comes closest to an appropriate test, namely that “matter” encompasses anything which arises from the same factual situation which gave rise to the regulatory action in the statutory notice referred to the Tribunal or is otherwise connected with the circumstances, the evidence and/or the allegations, whether factual or legal, which were before the FCA’s decision-maker, but is in my view still too narrow.

202.

What is clear is that there must be some sufficient relationship between the matter referred and the decision which triggers the right to refer, and the critical question is: what is required by the concept of sufficiency in this context? The answer is to be found in the fact that the decision is a stage in the regulatory process, and the Tribunal reference a further stage in that process. The logical answer is therefore that something is sufficiently related to the decision which triggers the reference to amount to or be included in “the matter” if it has a real and significant connection with the subject matter of the process, in the sense of its procedural or substantive content, which has culminated in the decision notice or supervisory notice. Such connection must be real and significant, not fanciful or tenuous. But if so, that is sufficient. It need not be something upon which the FCA has specifically relied during the process, provided that it has a real and significant connection with the subject matter of the process. What is required when the FCA seeks to rely on something new in the Tribunal is an examination of what is new, and of the procedural or substantive content of the process culminating in the decision or supervisory notice, and the establishment of a real and significant connection between them. If what is new has this connection it is within the Tribunal’s jurisdiction. It is a separate question whether the FCA should be permitted to rely upon it in any particular case, which is a matter for the exercise of the Tribunal’s case management powers as to whether it would be just and fair.”

203.

If it be objected that this is not hard-edged, I would respond that it is undesirable to seek to define it more prescriptively because it must be flexible enough to take account of over 300 types of decisions, set out in DEPP Chapter 2 Annexes 1 and 2, which may give rise to a reference to the Upper Tribunal. However, it is consciously and deliberately a very wide gateway, for the reasons I have discussed. Accordingly, I would expect it to be a rare and obvious case which fell outside it so as not to come within the Tribunal’s jurisdiction.”

Applying these principles, it is therefore necessary to assess what is the “subject matter” of this reference.

It is clear that throughout the prior regulatory proceedings and the original Statement of Case, the Authority’s case for disciplining Mr Staley and prohibiting under s 56 FSMA is that in approving the draft of the Letter he breached ICR 1, ICR 3 or SMCR 4.

It is also clear that this remains the position in the ASOC. The question from the jurisdiction point of view is whether, as contended by the Authority, the amendments do no more than seek to add evidence which supports the breaches which have always been alleged in this case.

Mr Staley’s Reference Notice identified the issues which he wished the Tribunal to consider, namely that the imposition of a financial penalty and a prohibition order on the basis of the regulatory provisions referred to at [75] above was wrong as the misconduct alleged was not proven against Mr Staley.

It is clear that in the original Statement of Case, the Authority advanced the same alleged breaches as was contained in the Warning Notice and the Decision Notice which were issued by the RDC in this case. The Statement of Case set out all facts and matters which the Authority relied on to support the referred action, based on the evidence that was then in its possession.

The question therefore for the Tribunal in this case is whether, in respect of the alleged facts and matters pleaded by the Authority for the first time in the ASOC and to which Mr Staley objects have a “real and significant connection with the subject matter of the process” , as stated by Popplewell LJ at [202] of BlueCrest, in the sense of its procedural or substantive content, which has culminated in the Decision Notice.