01 September 2014

The FCA has been allowed to change the grounds on which it banned an insurance broker, after having had to accept that its original reasons were flawed. The grounds on which the FCA did subsequently succeed in banning the broker actually arose not from the conduct of his business, but in the conduct of his defence to the original allegations.

The Upper Tribunal in Stephen Robert Allen v FSA, has upheld a decision by the Financial Conduct Authority to ban an insurance broker from carrying out any regulated activity. The ban was imposed by the Regulatory Decision Committee ('RDC') on the basis of allegations that secret fees had been added to a client's premiums and evidence to that effect from a representative of the client. During high court proceedings concerning the fees, however the judge dismissed that witness' credibility. Mr Allen consequently applied to the tribunal to overturn the RDC's decision and the FCA (FSA) had to accept that reliance upon the witness was unsafe.

Unfortunately for Mr Allen, the trial judge had done more than simply criticise the client witness. The Judge had also found that Mr Allen had forged evidence and attempted to mislead the High Court, as well as diverting the Court by discrediting Mr Webster and concealing his own wrongdoings. This conduct in itself showed him to be unfit to continue as a broker.

The Upper Tribunal considered the new evidence and instead of requiring the FCA to start new proceedings agreed that Mr Allen was not a 'fit and proper person' to perform any function in relation to a regulated activity and upheld the ban. It accepted that the judge's findings in themselves were not necessarily proof of Mr Allen's conduct, but having reviewed the evidence Mr Allen assembled to show that the judge had been wrong about him, including bizarrely the results of a lie-detector test Mr Allen had arranged for himself, it found no reason to reject the judge's findings.

This case shows a pragmatic approach being taken by the tribunal in not requiring the FCA to abandon and recommence proceedings when it emerged that the original reasons were wrong. However it does also open the door to the possibility in other cases of the FCA changing its reasons or grounds for a ban or other penalty at a late stage.

Key contact


Suzanne Padmore Partner

  • Pensions Disputes
  • Professional Negligence
  • Financial services Disputes and Enforcement 

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