UT-2024-000019 - [2025] UKUT 00257 (TCC)

Section 96(3) PA 2004 provides that a determination which is the subject matter of a determination notice (in this case the determination by the Panel to issue a CN to AP) may be referred to this Tribunal by any person to whom the determination notice is given, in this case AP.

According to section 103(3) PA 2004, on such a reference the Tribunal may consider any evidence relating to the subject matter of the reference, whether or not it was available to the Regulator at the material time.

Section 103(4) PA 2004 provides that on a reference, the Tribunal must determine what (if any) is the appropriate action for the Regulator to take in relation to the matter referred to it. In this case, the matter referred is whether a CN should be issued to AP and, if it should be, what amount would be reasonable to specify in it.

As this Tribunal made clear in Re Bonas Group Pension Scheme, [2011] Pens. LR 109 (“Bonas”), the basis of the Tribunal’s jurisdiction is that it considers the matters in dispute de novo rather than as an appeal. Warren J said at [37] of that decision:

“There is nothing in these provisions, or elsewhere in PA 2004, which constrains the Tribunal’s approach to its function in the way that an appellate court usually feels itself constrained on an appeal, whether the appeal is by way of review or rehearing… (both of which terms have led to many pages of case reports). Nor is there anything in any other statute which has been brought to my attention or in the Upper Tribunal Rules which does so…”.

Accordingly, once a reference has been made, the Tribunal’s function is to provide the final stage in the regulatory process to determine what is the appropriate action for the Regulator to take, having considered all the evidence relating to the subject matter of the reference. In effect, it stands in the shoes of the Panel and (here) must decide whether it is appropriate for the Regulator to issue a CN. This point was elaborated on by Warren J in Bonas at [38]:

“The decision which the Tribunal makes is, however, its own decision, formed after its own assessment of the evidence before it (which may differ from that before the Panel) and after hearing the arguments addressed to it (which may differ from those presented to the Panel). The Tribunal does not sit as an appellate body from a decision of the Panel; it is not necessary to show that the Panel was in error. It is often the case that a committee or other body of persons (such as the Panel or indeed a tribunal or court) is faced with a range of decisions which it would be reasonable to make. On an appeal from a decision of such a committee or other body or persons, it might be necessary to show that they had acted outside that range even though the appellate court would, if the decision had been for it to make, have reached a different decision. The Tribunal’s function in relation to the Panel is not of that sort. Rather, it is for the Tribunal to make its own decision; it may do so, indeed it is bound to do so, even if it thinks that the decision of the Panel fell within the range of the reasonable.”

However, although the Tribunal is tasked with reaching its own decision, as Warren J’s comments in Bonas make clear, it should not ignore the decision and process of the Panel. At [37] he observed:

“Of course the Tribunal will pay due respect to the decision of the Panel and will usually be slow to depart from the Panel’s decision if made after an oral hearing if there has been full evidence and argument.”

At [72] he commented:

“None of this is to say that the Tribunal will start all over again as if the Panel had not considered the matter in the first place. This is particularly so when the Panel has heard live evidence and cross-examination of witnesses. The Tribunal will be slow to allow either the target or the Regulator to re-open the Panel’s findings of fact. But that it has jurisdiction to do so in an appropriate case is, I consider, clear.”

In this case there was an oral hearing of two days before the Panel and there was cross-examination and full argument. Accordingly, whilst we have jurisdiction to allow the Regulator or AP to reopen findings of fact if we consider it appropriate, we should be slow to do so.

A particular point of relevance for us is the ability of the Regulator to argue for an outcome that is higher than the outcome that the Panel decided, which is what the Regulator is looking to do here. It is arguing for a larger sum, not larger than that specified in the warning notice, but larger than the sum in the determination notice. Warren J addressed this issue in Bonas when (at [69]-[70]) he said:

“69 Clearly the Regulator is entitled to argue before the Tribunal that its own determination or that of the Panel should be upheld. But can it argue in favour of something different? In particular, where the Panel has determined that a contribution notice in a specified sum should be issued to a person, can the Regulator argue in favour of a larger sum, at least up to the amount specified in the warning notice?

70 In my view, the Regulator is entitled to argue that the Tribunal should depart from the determination of the Panel so as to exercise the relevant regulatory function in the way which it, the Regulator, considers appropriate at the time when the matter is dealt with by the Tribunal. The Panel, as we have seen, exercises powers on behalf of the Regulator; it is no doubt for that reason that the Regulator itself cannot refer the determination of the Panel to the Tribunal. But once the decision of the Panel has been challenged, there is no reason, in my view, why the Regulator should be bound by that determination. By referring the matter to the Tribunal, the target must accept that he becomes subject to the power of the Tribunal to determine the appropriate action. The Regulator must be allowed, in my judgment, to present to the Tribunal what it sees as the appropriate regulatory action at that time. It may be that it cannot go beyond the relief sought in the warning notice, but that issue does not arise in the present case.”

Having made its determination, as provided by section 103(5) PA 2004, the Tribunal must remit the matter to the Regulator with such directions as it considers appropriate for giving effect to its determination which, by virtue of section 103(6), may either confirm, vary, or revoke the Regulator’s determination or substitute a different determination.

Section 103(7) PA 2004 provides that the Regulator must act in accordance with the determination of, and the directions given by, the Tribunal.

It is well established in references of financial services cases in this Tribunal that the burden of proof lies with the Regulator and the standard of proof to be applied is the ordinary standard on the balance of probabilities, namely whether the alleged events more probably occurred than not.