Upper Tribunal Tax and Chancery Chamber

UT (Tax & Chancery) UT/2023/000050 - [2025] UKUT 00123 (TCC)

Fecha: 06-Ago-2024

Discussion

Discussion

10.

Rule 5 of the Rules provides that the Tribunal may permit or require a party to amend any document. Rule 2 provides that the overriding objective of the Rules is to enable the Upper Tribunal to deal with cases fairly and justly. This includes dealing with cases in a way which is proportionate to their importance as well as avoiding unnecessary formality and avoiding delay “so far as compatible with the proper consideration of the issues”.

11.

The April Decision discusses (at paragraphs [13]-[19]) the factors to be taken into account when deciding whether to allow Mr Reynolds to further amend the Amended Reference, and concludes that the Tribunal should only permit Mr Reynolds to expand the Amended Reference, if it is satisfied that there would be a real prospect of the Tribunal deciding (1) that the full Prohibition was not within the range of reasonable decisions open to the Authority, or (2) that is appropriate to reduce the amount of the Penalty. To apply any other test would be contrary to the overriding objective, as it would risk significant time and costs being wasted hearing issues the determination of which would not have any real prospect of changing the result of the Amended Reference. I do not understand either the Authority or Mr Reynolds to take issue with my summary of the test to be applied.

12.

Although allowing Mr Reynolds to expand the scope of his reference would (without doubt) cause a delay in this matter proceeding to a substantive hearing and increase costs, that needs to be weighed against the very serious nature of the allegations made against Mr Reynolds.

13.

In the April Decision I discussed at some length the procedural history of the reference and the confusion (at least on Mr Reynolds’ part) as to exactly what had been referred. Even though, as a litigant in person, Mr Reynolds should be given some margin of accommodation, I concluded that he had not always been as careful as one might expect in relation to a point (his desire to challenge the Authority’s core findings against him) he says is so important for him. However, weighing all the relevant factors together, I concluded that it would not be fair or just (even at this late stage) to refuse Mr Reynolds permission to amend his reference to refer the allegations of lack of honesty and integrity and the Prohibition and Penalty in that light as long as the points he seeks to make in his expanded reference have a reasonable prospect of getting him a different (and improved) outcome.

14.

Relevant to that decision is the fact that the Authority has only alleged a breach of Statement of Principle 1. If Mr Reynolds can establish that he has not breached Statement of Principle 1 (because his behaviour was honest, even if misguided) and if (following Bluecrest) a breach of Statement of Principle 2 is not before the Tribunal, Mr Reynolds’ chances of obtaining a different outcome would be reasonable rather than fanciful. In any event, Mr Reynolds says that (if Statement of Principle 2 is in point) he took appropriate advice from people who were (or he reasonably thought were) suitably qualified and followed it. So, he says, he has not been negligent.

15.

On the authorities as they stand at the moment, an allegation of a breach of Statement of Principle 1 would not result in the question whether Mr Reynolds had breached Statement of Principle 2 being before the Tribunal. This is the natural consequence of the decision of this Tribunal (Judge Herrington and Judge Jones) in Bluecrest Capital Management (UK) LLP v FCA, [2023] UKUT 133 (TCC), an appeal against which has recently been heard by the Court of Appeal. I considered whether I should delay deciding on Mr Reynolds’ application until the position here is clear. I concluded, however, that this would not be just or reasonable as the delay involved could be very significant, especially if the Court of Appeal’s judgement is Bluecrest is appealed.

16.

I have decided that I should reach a conclusion on Mr Reynolds’ application now, so that these proceedings are not delayed any longer, and that I should do so on the basis that the matter before the Tribunal relates only to Statement of Principle 1. If the decision in Bluecrest shows that this is wrong and the question of Statement of Principle 2 is before the Tribunal, the Authority can always seek to amend its statement of case in due course to include that issue. Whether it would be given permission to do so and the consequences of Statement of Principle 2 being before the Tribunal are not matters we should speculate on at this point.

17.

Another difficulty in dealing with Mr Reynolds’ application is that he makes assertions as to what particular bodies of evidence will demonstrate. For example, he suggests that the client factfinds would show that the advice given to clients was correctly recorded in their suitability reports and so the suitability reports have not been (to use his expression) “doctored” and that the advice Active Wealth gave was appropriate. Mr Reynolds does not have access to any of this evidence at the moment. The Authority has criticised the lack of specificity in Mr Reynolds’ statements about the evidence but did not suggest that the evidence does not exist or that it does not prove what Mr Reynolds says it does. The Authority has not admitted this either; it has largely not commented on the evidence. In fairness to Mr Reynolds, I will proceed on the basis that evidence exists and can be produced which will demonstrate what Mr Reynolds claims it will.

18.

The final difficulty with Mr Reynolds’ application is that he is not legally represented, at least as far as this aspect of his reference is concerned. The Authority criticises the lack of specifics in Mr Reynolds’ application, which (they say) falls short of the level of clarity and detail I required (see the April Decision at [93]). I agree with the Authority that Mr Reynolds’ application could have been clearer and more specific. I would go so far as to say that his application would not have been acceptable if it had been prepared by counsel or solicitors. However, Mr Reynolds does not have the luxury of legal representation and I consider that it would be fair and just to consider Mr Reynolds’ application to the extent that its overall effect is apparent. Clearly, the fact that Mr Reynolds will need to deal with this aspect of his reference alone and unaided, and will need, by the time of the substantive hearing, to fill the gaps the Authority has identified in the positions set out in his application, may well impact on his chances of success. However, I do not consider that his lack of legal representation and the difficulties that will create should count against him when it comes to deciding whether he has a reasonable (as opposed to fanciful) prospect of success for the purposes of deciding this application.

19.

Turning now to the various allegations against Mr Reynolds and his and the Authority’s position on them:

(a)

Mr Reynolds accepts that commissions in excess of £1m were taken which should not have been. The Authority says that, even if Mr Reynolds can satisfy the Tribunal that he believed the commission was permitted and that he was not dishonest (because other advisers were paid in the same way and he believed this was acceptable to the Authority), he would still have received a large amount of commission over a 3 year period in breach of the Authority’s rules and that alone would put a full Prohibition within the range of reasonable decisions the Authority could take. The problem with this position for the Authority is that, as it has only asserted a breach of Statement of Principle 1, a negligent or non-negligent breach of the Authority’s rules is not before the Tribunal.

(b)

As far as investments in P6 are concerned, Mr Reynolds’ position is that what he was told by Greyfriars (which he says is known to the Authority) makes it clear that he thought P6 was suitable for investment and why. He has not been specific (for example by explaining in detail what it was he thought about P6), but his position here is clear.

(c)

Mr Reynolds’ position in relation to completing P6 application forms is that he was guided in completing the forms by Greyfriars/Best International. He has also explained how he assessed clients’ net worth and risk appetite and why he says that P6 represents an appropriate proportion of clients’ overall investments. However, the Authority’s position is that, regardless of all of that and of the fact (if true) that clients wanted to invest in P6, it was wrong of Mr Reynolds to have certified (for example) that particular clients had a high risk profile and capacity for loss, were “high net worth” or were experienced investors in relevant assets or that a client’s investment in P6 did not exceed the maximum required by P6 when those statements were not correct in the light of his own assessment of their positions and the information he had collected. The financial promotion rules exist to some extent to protect people from themselves and so it is a serious regulatory breach for a person such as Mr Reynolds to help an investor circumvent those protections. Even in his final submissions (when this point was very much to the fore) I cannot detect any answer from Mr Reynolds to that allegation.

(d)

– (e) Mr Reynolds’ position here is clear. He says that the evidence will show that the suitability reports were properly completed (not ‘doctored’) and they reflected the underlying factfinds. Accordingly, he says that his advice was suitable. He also says that subsequent valuation movements show no loss and vindicate that advice. The relevance of that last point was not initially obvious to me. It made me wonder whether Mr Reynolds’ position might now be that he had advised clients to transfer out of BSPS and that advice has been vindicated, but I have been corrected on that. His position appears to be that he advised clients not to transfer out of BSPS, but they had already decided to do so, and accordingly he recommended an alternative provider and there is no loss when that pension provision is compared with BSPS. I agree with the Authority that the suitability reports not being picked up by third parties, who were not comparing them with the underlying factfinds, tells us nothing. But clearly, if the rest of the evidence demonstrates what Mr Reynolds says it does, he might well have an answer to the allegation that he was recklessly or dishonestly making unsuitable recommendations about transferring out of BSPS and “covering his tracks” by writing false suitability reports.

(f)

Again, Mr Reynolds has not been specific here, but his position (that exit fees had been disclosed) is clear. If he can produce the evidence (which he says exists and is known to the Authority), he should be able to resist this allegation.

(g)

Again, although the evidence is not to hand for Mr Reynolds to review/summarise and he has not been specific about what he did (as opposed to what the individuals concerned did not do), he would seem to have the material he needs to deal with this point.

(h)

At the time of my July Decision Mr Reynolds had asserted that he could deal with the allegation that he misled the Authority and the Insolvency Service. He had not, however, given any indication as to his position on the answers which the Authority says were dishonest. In response to my July Decision, Mr Reynolds set out how he would seek to rebut some of the relevant findings in the Decision Notice. The Authority accepts that some of these points would need to be determined at a final hearing, but in their final submissions they identified several examples in the Decision Notice of Mr Reynolds misleading the Authority which he had not responded to. Accordingly, Mr Reynolds’ proposed challenge to ground (h) has no real prospect of success. In any event, given my conclusion on ground (c), even if his challenge on ground (h) were successful, this would not affect the outcome so far as the Prohibition is concerned.

(i)

Mr Reynolds’ position here is, again, lacking in specifics, but his position (that the Authority knows his answer to the question they raise in their submissions) is clear.