[2025] UKUT 00185 (TCC)

In FCA v Forster [2023] EWHC 1973 (Ch) at [230]-[231], Gleeson J considered the meaning of “knowingly concerned”, and repeated the two limbs of the test approved in Ferreira. Having cited [47] of that judgment, he went on to say:

“237.

I think that Snowden LJ’s meaning here is clear - a director of a firm who has the ordinary knowledge of the firm’s activities which a director is expected to have should not automatically be liable under s.382 on a breach by their firm of a regulatory requirement. Directors of financial firms are entitled to the same company law protections as directors of any other company…the proposition as articulated by Snowden LJ seems clearly correct. The ordinary rules of director’s liability are not dispensed with simply because the firm concerned engages in unauthorised financial business. The FSMA does provide the FCA with the ability to pursue directors personally, but an essential threshold condition for such pursuit is, as Snowden LJ put it, ‘some fraud’.

238.

The conclusion from this is that in order for s.382 to apply, there must be some involvement by a director in the contravention of a regulatory rule by his company which goes some way beyond the normal involvement of a director in the affairs of the company.”

That judgment in Forster, including these paragraphs, thus reflects our analysis of Ferreira. The test for “knowingly concerned” is that set out above at §496, and the passage at [47] of Ferreira instead explains what is required before a regulator can issue a restitution order under s 382 to a person who was “knowingly concerned”.

Mr Pritchard submitted that “you can replace s 382 with s 91” in the paragraphs from Forster cited above, so that the Authority was only able to impose a penalty for being “knowingly concerned” if the director’s involvement in the contravention “goes some way beyond the normal involvement of a director in the affairs of the company”.

We disagree. The cited passages are concerned with the power given by s 382 for a court, on the application of a regulator, to order a director to make restitution for wrongs carried out by the company: as explained above, such a restitutionary order pierces the corporate veil because the individuals are being required to compensate third parties for the actions of the company. The penalties imposed on the Applicants are not restitutionary. They are a punishment imposed by the Authority for being knowingly concerned in the breach carried out by the Bank. The passage at [47] of Ferreira and those at [237]-[238] of Forster are thus irrelevant to the position of the Applicants.