UT (Tax & Chancery) UT-2022-0000150 - [2024] UKUT 00254 (TCC)

Section 59 requires regulated financial services firms to obtain the Authority’s prior approval for an individual to carry out certain “controlled functions”. These are set out in the chapter relating to “Supervision” in the Authority’s Handbook, and include the Chief Executive function and the Executive Director function; the former is given the code number SMF1 and the latter SMF3.

Section 60 requires the application for approval to be made in the manner directed by the Authority, and to contain the information the Authority may reasonably require, together with other specific matters.

Section 61 reads, so far as relevant to this case:

“The regulator to which an application for approval is made under section 60 may grant the application only if—

(a)

it is satisfied that the person in respect of whom the application is made (“the candidate”) is a fit and proper person to perform the function to which the application relates…”

In Thomas v FSA [2004] FIN/2004/0006 at [99], Judge Brice held that on such a reference, the Authority “does not have to prove that the Applicant is not fit and proper but rather that it is not satisfied that the Applicant is fit and proper”. In Köksal v FCA [2016] UKUT 0478 (TCC) (“Kôksal”) at [37] the Tribunal endorsed that reading of the legislation, and we respectfully concur.

Section 55Z3(1) provides that “an applicant who is aggrieved by the determination of an application made under this Part may refer the matter to the Tribunal”. Section 133 is headed “Proceedings before the Tribunal: general provisions”. It specifies the UT’s jurisdiction in certain types of references, including in relation to disciplinary matters, and then provides:

“(6)

In any other case, the Tribunal must determine the reference or appeal by either—

(a)

dismissing it; or

(b)

remitting the matter to the decision-maker with a direction to reconsider and reach a decision in accordance with the findings of the Tribunal.

(6A)  The findings mentioned in subsection (6)(b) are limited to findings as to—

(a)

issues of fact or law;

(b)

the matters to be, or not to be, taken into account in making the decision; and

(c)

the procedural or other steps to be taken in connection with the making of the decision.

(7)

The decision-maker must act in accordance with the determination of, and any direction given by, the Tribunal.”

Those subsections therefore provide that, where the reference relates to a non-disciplinary matter, the Tribunal has a supervisory jurisdiction. In Carrimjee v FCA [2016] UKUT 0447 (TCC) (“Carrimjee”), the Tribunal explained how that jurisdiction operates:

“[38] If, having reviewed all the evidence and the factors taken into account by the Authority in making its decision, and having made findings of fact in relation to that evidence and such other findings of law that are relevant, the Tribunal concludes that the decision to prohibit is one that is reasonably open to the Authority then the correct course is to dismiss the reference.

[39] Alternatively, if the Tribunal is not satisfied that in the light of its findings that the decision is one that in all the circumstances is within the range of reasonable decisions open to the Authority, the correct course is to remit the matter with a direction to reconsider the decision in the light of those findings. For example, that course would also be necessary were the Tribunal to make findings of fact that were clearly at variance with the findings made by the Authority and which formed the basis of its decision. That course would also be necessary had there been a change of circumstance regarding the applicant which indicated that the original findings made on which the decision was based, for example as to his competence to undertake particular activities, had been overtaken by further developments, such as new evidence which clearly demonstrated the applicant’s proficiency in relation to the relevant matters. Such a course would not usurp the Authority’s role in making the overall assessment as to fitness and propriety but would ensure that it reconsidered its decision on a fully informed basis…”

Although Carrimjee concerned the imposition of a prohibition order, the Tribunal has
confirmed that the principles to be applied are the same in an authorisation case: see Lewis
Alexander Ltd v FCA at [33] to [34], Köksal at [25] to [28] and Soszynski v FCA [2022] UKUT 00247 (TCC) (“Soszynski”) at [33].

In Soszynski the Tribunal went on to say:

“[34] …the Upper Tribunal must dismiss the Reference unless it makes findings of fact and/or law which lead to a conclusion that the Decision was not one that was reasonably open to the Authority.

[35] Furthermore, even if the Tribunal finds flaws in the Authority’s decision-making process, for example by making findings of fact which contradict or are inconsistent with the findings on which the Authority based its decision, it should not remit the Reference if it is of the view that despite such failings, it is inevitable that if the matter were remitted, the Authority would come to the same conclusion.”