UT-2022-00097 - [2024] UKUT 00352 (TCC)

Section 133(4) FSMA provides that, 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 decision-maker at the material time. This is not an appeal against the Authority’s decision on each of the references but a complete rehearing of the issues which gave rise to the decision and which the applicant wishes the Tribunal to consider. Section 133(5) to (7) FSMA, provides as follows:

“(5)

In the case of a disciplinary reference or a reference under section 393(11), the Tribunal must determine what (if any) is the appropriate action for the decision-maker to take in relation to the matter, and on determining the reference, must remit the matter to the decision-maker with such directions (if any) as the Tribunal considers appropriate for giving effect to its determination.

(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 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.”

Here, the Applicant does not contest the Authority’s findings on liability, as set out in the Decision Notice. It only seeks to challenge the quantum of the financial penalty that the Authority seeks to impose. A reference of a decision to impose a financial penalty is a “disciplinary reference” and accordingly, the Tribunal has the power to determine at its discretion what (if any) is the appropriate action for the Authority to take, including a determination as to whether or not to impose a financial penalty and, if so, the amount of such penalty.

As this Tribunal indicated in Tariq Carrimjee v FCA [2015] UKUT 0079 (TCC) the Tribunal is not bound by the Authority's policy when making an assessment of a financial penalty on a reference, but it pays the policy due regard when carrying out its overriding objective of doing justice between the parties. In so doing the Tribunal looks at all the circumstances of the case.

Similarly, in Westwood Independent Financial Planners v FCA [2013] WLUK 630, the Tribunal held at [181]:

“In considering the appropriate level of a penalty we are not bound by the Authority’s tariff for particular misconduct, or even the factors the Authority takes into account, but may reduce or increase a penalty which is the subject of a reference on any grounds we think fit, within the parameters of the proper exercise of judicial discretion. In practice, the Tribunal respects the Authority’s tariff, in the interests of consistency between applicants, while departing from it in an appropriate case.”

This approach was followed by the High Court in FCA v Da Vinci Invest Limited and others [2015] EWHC 2401 (“Da Vinci”) where Snowden J said in the context of the imposition of a penalty for market abuse at [201]:

“It was the FCA's submission, and I accept, that in determining any penalty under section 129, the starting point for the court should be to consider the relevant DEPP penalty framework that was in existence at the time of commission of the market abuse in question. To do otherwise would risk introducing an inequality of treatment of defendants depending upon whether the proceedings were taken against them under the regulatory route or the court route and depending upon how long the proceedings had taken to come to a conclusion. By the same token, however, in common with the Upper Tribunal, the court is not bound by that framework, or by the FCA's view of how it should be applied. But if the court intends to depart from the framework in a particular case, it should explain why it considers it appropriate to do so. It occurred to me that in this regard there is some analogy with the approach of the criminal courts to the application of the sentencing guidelines produced by the Sentencing Council.”

There are other passages in Da Vinci which are relevant to this case, to which we will return.