“40. In Tinney v FCA[2018] UKUT 0435 (TCC) the Tribunal, having considered the cases of Hoodless and Blackwell v FSA (2003)and Vukelic v FSA (2009) at [10] and [11] set out the following guidance at [12] to [14] which we gratefully adopt: “12. The Tribunal in First Financial Advisors Limited v FSA [2012] UKUT B16 (TCC) agreed with the observation in Vukelic and endorsed the guidance in Hoodless and Atlantic Law. At [119], the Tribunal observed: “Even though a person might not have been dishonest, if they either lack an ethical compass, or their ethical compass to a material extent points them in the wrong direction, that person will lack integrity.”
“It may be that Mr Vukelic was not dishonest on this transaction in the sense of deliberately participating in a scheme to deceive and we are prepared to accept that he was not. But he turned a blind eye to what was obvious and failed to follow up obviously suspicious signs. We do not believe that an educated professional in a senior position could have been oblivious to the signs that the transaction depended on concealment for its success. It is possible, but unlikely, that Mr Vukelic simply failed to spot what should have been obvious to a person in his position. But if that had been so it would have resulted from an inexcusable failure to ask obvious questions.”
“A person acts recklessly with respect to a result if he is aware of a risk that it will occur and it is unreasonable to take that risk having regard to the circumstances as he knows or believes them to be.”
“Reckless behaviour is capable of being characterised as a lack of integrity, and in determining whether behaviour is reckless regard must be had to what would reasonably have been appreciated or understood by persons in the same position as the individual in question. The standard to be applied is an objective one and does not depend on the particular knowledge the individual may, or may not have, of the risk in question. In the regulatory context with which we are concerned, a reckless failure to consider whether something is a risk may equally be found to amount to lack of integrity, as could be a reckless disregard of a known risk.”
“When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”
“(1) A firm must take reasonable steps to ensure that a personal recommendation, or a decision to trade, is suitable for its client. (2) When making the personal recommendation or managing his investments, the firm must obtain the necessary information regarding the client’s (a) knowledge and experience in the investment field relevant to the specific type of designated investment or service; (b) financial situation; and (c) investment objectives so as to enable the firm to make the recommendation, or take the decision, which is suitable for him.” (2) COBS 9.2.2R provides: “(1) A firm must obtain from the client such information as is necessary for the firm to understand the essential facts about him and have a reasonable basis for believing, giving due consideration to the nature and extent of the service provided, that the specific transaction to be recommended, or entered into in the course of managing: (a) meets his investment objectives; (b) is such that he is able financially to bear any related investment risks consistent with his investment objectives; and (c) is such that he has the necessary experience and knowledge in order to understand the risks involved in the transaction or in the management of the portfolio. (2) The information regarding the investment objectives of the client must include, where relevant, information on the length of time for which he wishes to hold the investment, his preference regarding risk taking, his risk profile, and the purposes of the investment. (3) The information regarding the financial situation of the client must include, where relevant, information on the source and extent of his regular income, his assets, including liquid assets, investments and real property, and his regular financial commitments.”
“A common platform firm must: (1) when relying on a third party for the performance of operational functions which are critical for the performance of regulated activities, listed activities or ancillary services (in this chapter "relevant services and activities") on a continuous and satisfactory basis, ensure that it takes reasonable steps to avoid undue additional operational risk; (2) not undertake the outsourcing of important operational functions in such a way as to impair materially: (a) the quality of its internal control; and (b) the ability of the appropriate regulator to monitor the firm's compliance with all obligations under the regulatory system and, if different, of a competent authority to monitor the firm's compliance with all obligations under MiFID.”
“The conflict of interest could be of any kind, including a financial interest, a personal connection, or an obligation, for example, as a member or officer of some other body. But ultimately, the question of what conflicts of interest fall within this description is a question for the court, taking into account all the circumstances of the case.”
“A firm must take all reasonable steps to identify conflicts of interest between: (1) the firm, including its managers, employees and appointed representatives (or where applicable, tied agents), or any person directly or indirectly linked to them by control, and a client of the firm; or (2) one client of the firm and another client; that arise or may arise in the course of the firm providing any service referred to in SYSC 10.1.1R.”
“A firm must maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest as defined in SYSC 10.1.3R from constituting or giving rise to a material risk of damage to the interest of its clients.”
“(1) If arrangements made by a firm under SYSC 10.1.7 R to manage conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of a client will be prevented, the firm must clearly disclose the general nature and/or sources of conflicts of interest to the client before undertaking business for the client. (2) The disclosure must: (a) be made in a durable medium; and (b) include sufficient detail, taking into account the nature of the client, to enable that client to take an informed decision with respect to the service in the context of which the conflict of interest arises. (3) …”
“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.”
“(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.”
“It is nonetheless the case that regard must be had to the quality of the evidence. As the Court said in In re S-B, if an event is inherently improbable, it may take better quality evidence to persuade a court or tribunal that it has happened than would be required if the event were commonplace. There is, however, as Lord Hoffman in In re B had pointed out, at [15], no necessary connection between seriousness and inherent probability.”
"Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth. I have been driven to the conclusion that the Judge did not pay sufficient regard to these matters in making his findings of fact in the present case."
“It is not to be forgotten that, in the present case, the Judge was faced with the task of assessing the evidence of witnesses about telephone conversations which had taken place over five years before. In such a case, memories may very well be unreliable; and it is of crucial importance for the Judge to have regard to the contemporary documents and to the overall probabilities.”
“…the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events.”
“There isn’t a strict formula. One has to apply – yes, I guess one does have to apply an impression based on the evidence that is available, but it that may entail acquiring more information than is currently available in order to reach a reasonable conclusion” (4) Mr Lockie also accepted that at least the following potential indicators of lower risk were present within the investments: • the involvement of any national finance regulator is of relevance to risk profile; • bonds are a generally defensive asset class; • bonds are typically lower risk than direct equity investments; • while diversification is not conclusive of risk in any event, there was some diversification within the property portfolios indicative of lower risk; • purchasing distressed property at below market risk afforded some level of ‘protection’ against drops in market value; and • the presence of a gating mechanism could operate to reduce risk; (5) Mr Lockie conceded in evidence that (i) he would not look at the individual holdings of a property fund into which he had invested his own clients; (ii) he would not expect an IFA to understand captive insurance; and (iii) as to questions of liquidity and disinvestment, he had not been provided with information about redemptions; (6) When asked about whether it would have been reasonable for an IFA to seek out the expertise of others in respect of these investments, Mr Lockie agreed that it would be reasonable to seek the professional opinion of others that were better qualified to comment on it or to evaluate it than he was; and (7) On Mr Lockie’s own risk assessment matrix, there were several indicators of lower risk, notwithstanding his overall assessment. (5) Consequently, Mr Lockie’s evidence cannot demonstrate to the civil standard that the Products were “obviously” high risk; rather Mr Lockie’s evidence supports the assertion that different IFAs might permissibly interpret and weigh different risk factors differently. (6) The Applicants placed much stead in their risk assessment on the fact that they understood the investments to be “standard assets”
“My view is that it should be possible to conceive of the AIGO loans as standard assets in the terms of the proposed formulation in the [consultation paper]. The matter is not certain, simply because the terms of the consultation on vague and imprecise, and the FCA has yet to provide definitive rules.”
“…we offer an Independent advice service. We will recommend investments based on a comprehensive and fair analysis of the market. We will place no restrictions on the Investment Markets we will consider before providing investment recommendations, unless you instruct us otherwise. We will however only make a recommendation when we know it is suitable for you.”
“We operate independently and therefore provide investment services from the whole market.”
“We have agreed with the FCA that Non-Standard Investments are not suitable for most Clients and as a Firm we do not believe unregulated assets, which cannot be readily valued or realised restricts our Clients position and do not advise their use.”
“[Firm] offers the highest level of service and independent financial advice. No two clients are the same which means that our financial planning and investment advice is tailored specifically to your needs.”
“Would you prefer your pension fund to: • Grow at a fixed and known-rate each year? • Go up or down in value depending on the underlying investments performance?” • Grow at a fixed and known-rate each year? • Go up or down in value depending on the underlying investments performance?”
“If it could be guaranteed that the value of your pension fund at the end of an agreed term could not fall below the amount invested would you want to incorporate this feature? • Yes [or] • No” • Yes [or] • No”
“You prefer to take very little risk with your money. A typical “Very cautious” portfolio will have only a small proportion invested in equities with the balance in other assets to provide diversification.”
“You prefer to take very significant risk with your money. A typical “Ultra Speculative” portfolio may have almost all of the funds invested in equities with the balance in other assets to provide diversification. There may be an increasing proportion of specialised equity within the portfolio.”
“It will take an IFA approximately 2 days to analyse your information and prepare your personalised Recommendation Report.”
“I would suggest that we start with three a day initially and these will be paid at£100 per case when the receiving Scheme receipts the monies into the fund.”
“If all is well I would intend to start early next week if that suits you Andrew?”
“I am proposing that this route will change nothing, except for the fact that Andrew now takes the responsibility for the cases. The invoicing for the fee of£500 per case remains the same method and I need your agreement to that also.”
“I have been given the opportunity to meet and complete a Fact Find on [HJL] client; this will involve no more than completing a Fact Find and then discovering if I may be able to help their client. I will ensure that I complete the review and see where I can help within a suitable timeframe to all my usual standards…”
“I understand that they have now moved the product to it being an advisable switch. That means, that as we will be giving advice, that we don’t have to have them registered and I can negotiate a 3% fee on ALL transfers. Obviously, I will be supplying the packaged client – all supporting documentation will be wrapped into the file – so it will simply be a case of putting our name to it and effecting the transfer. I would then suggest that as each transfer has an average value of£50k that we simply split the fee 50/50. In effect, every case you do will generate gross£1500 and we get£750 each from every case? Provider will almost certainly pay your Network and then, once it is filtered through to you, I will invoice for my share? My understanding is that they have over 700 cases per month at the moment? And only four others doing this for them!!!! That would mean we could collar over 150 cases prepackaged, per month and that would generate us gross a ridiculous£200k plus per month!!!!! I think we adopt the “suck it and see” approach and ask for one case, submitted and then see if any shit is thrown out? If not, gradually increase our numbers?????”
“I think this will come off big style, I have just phoned Financial stating I wish to go directly authorised as I do not want their extra services as my business model is so simple. They are going to set me up, it takes 3 months, they are pinging a form over to get the ball rolling. They think I just don’t want the back office stuff they provide. We can continue with my new bank account, nothing changes going forward, my fees increase slightly, but no one will have access to my business but me, we can pretty much do what we want then …”
“I’m not sure how this fits with the Pension transfers, better to keep it separate and keep it off the radar, I’ll just use the IFA practice for my business. We can still keep things compliant moving forward and see how it evolves”
“I can now put things into place I’ve been working on these past few months. I was in London last week tying a few things with Tom a new business partner and things are looking good moving forward.”
“We believe pension transfers or switches to SIPPs intended to hold non-mainstream propositions are unlikely to be suitable options for the vast majority of retail customers. Firms operating in this market need to be particularly careful to ensure their advice is suitable.”
“In the cases we have seen, customers’ existing arrangements were invariably traditional pension plans invested in mainstream funds or final salary schemes, with the customer generally having no experience of non-mainstream propositions and many having very limited experience of standard investments. The new arrangements firms proposed were to transfer or switch customers’ funds to a SIPP, with a view to investment in non—mainstream propositions, which were typically unregulated, high risk and are highly illiquid investments. Some examples of these investments are overseas property developments, store pods and forestry. Such transfers or switches are unlikely to be suitable for the vast majority of retail customers. Generally speaking, we found very poor standards of advice. Firms typically failed to carry out an assessment of the customer’s overall financial position, needs, attitude to risk and objectives in relation to the switch or transfer as a whole (including the characteristics and risk of the wrapper and of the underlying investments). Advisers’ understanding of non-mainstream propositions was also typically very poor, at least in part because of inadequate due diligence on the products and on the product provider.”
“ • We explained to Mr Page why we initially contacted him as we received information he was involved in conduct similar to the alerts • We had reviewed his SIPP register and only saw six and Mr Page said they were all standard investments. He said that he had only been trading since June 2014 • We asked Mr Page to explain his relationship with Taylor Barton as they were sending out letters with his firm’s name on it – although he was hesitant at first he said that he gets leads from Hennessy Jones (which gets them from Taylor Barton) • Mr Page said that he had done due diligence on TB – we asked whether he had looked on the FS register and saw they were an introducer to another IFA and why would he then send leads to him-we asked whether he had known about Henderson Carter and he said he did not. • We explained that we would review matters in a few months time” • We explained to Mr Page why we initially contacted him as we received information he was involved in conduct similar to the alerts • We had reviewed his SIPP register and only saw six and Mr Page said they were all standard investments. He said that he had only been trading since June 2014 • We asked Mr Page to explain his relationship with Taylor Barton as they were sending out letters with his firm’s name on it – although he was hesitant at first he said that he gets leads from Hennessy Jones (which gets them from Taylor Barton) • Mr Page said that he had done due diligence on TB – we asked whether he had looked on the FS register and saw they were an introducer to another IFA and why would he then send leads to him-we asked whether he had known about Henderson Carter and he said he did not. • We explained that we would review matters in a few months time”
“Who are Taylor Barton They asked me if I have received introductions from them?”
“Don’t know them. Checking now but I would say no!”
“They are a lead provider and provide leads to Hennessy Jones. Not direct to us – so don’t use this info yet!!!!! I am still digging!!!!”
“We have not – Our introducer may have – again I’m still digging so don’t open to them yet!!!!!”
“This is okay I believe. It’s not us so we can deflect the flak!!!! If Needed!!!! But it’s not life threatening issue I don’t think mate!!!! Are they being bastards or ok?”
“TB provide leads to Hennessy Jones and DO COLD CALL Clients/prospects apparently. We can say that we will check with our introducer (HJ) to see if they use this company and if they do we will investigate further and if we do not receive an acceptable reply we will drop them immediately. But try and work it that HJ use a large number of lead providers and we don’t always have details of all of them! DON’T SAY THAT THEY COLD CALL MATE”
“I have taken the view that less is more in this situation and provide the draft for discussion attached. I am sure that there will be a number of views to be taken into account on this issue and await everyone’s thoughts before moving forward. I have copied [Person A] in as he will, if he is happy with the attached, send a copy to his Solicitors for their input. I am keen to get this out but more keen to make sure we kill it first time “STONE DEAD” …”
“I think I should make it absolutely clear that I do not recruit any Lead Generation Companies as part of my Business Model. I do have one Introducer who has recently started to provide me with a number of client introductions. These are qualified leads and come with signed [letters of authority] from the clients. We then collect the information on their existing plan [s] and complete a review of the same. At NO time leading up to my review has any advice being provided to the client by either the Lead Generator all the Introducer. Only after a full review of their circumstances do I issue the initial report which is followed up with a telephone call to establish whether they would like to proceed. Under no circumstance would I consider investments in unregulated products such as overseas property, forestry or store pods among other things. I do hope that this clears up this issue.”
“That may be great news as we will have only completed on small numbers and then that gives us six months until may next year!!!!...”
“Yes, I’ll make sure it looks as good as possible, I’ll email Mark my accountant tomorrow, I’m glad we can this sorted then have a good run at it, we’ve done 19 so far for GM.”
“Unbelievable, they have signed it off as a clean case: No remedial work to do”
“Agreed on behalf of Page Wealth Signed Thomas Ward Andrew Page Director/Authorised Signatory on behalf of Page Wealth”
“I paid£1500 into my No 2 Account and the£107 into My No 1 Account…. Hope that’s ok? The balance left is£254.19 mate.”
“… please arrange the total disinvestment of my SIPP back into cash with immediate effect. Following dialogue with the regulator, I have been requested to sample the process and have agreed to use my personal pension as the test case. If we can do this, it may reduce the pressure to disinvest all cases imminently.”
“any person appointed to direct its affairs, including a person who is a member of its governing body and (in accordance with section 417(1) of the Act): (i). a person occupying in relation to it the position of a director (by whatever name called); and (ii). a person in accordance with whose directions or instructions (not being advice given in a professional capacity) the directors of that body are accustomed to act.”
"34. The concepts of shadow director and de facto are different but there is some overlap. 35. A person may be de facto director even if there was no invalid appointment. The question is whether he has assumed responsibility to act as a director. 36. To answer that question, the court may have to determine in what capacity the director was acting (as in Holland's case). 37. The court will in general also have to determine the corporate governance structure of the company so as to decide in relation to the company's business whether the defendant's acts were directorial in nature. 38. The court is required to look at what the director actually did and not any job title actually given to him. 39. A defendant does not avoid liability if he shows that he in good faith thought he was not acting as a director. The question whether or not he acted as a director is to be determined objectively and irrespective of the defendant's motivation or belief. 40. The court must look at the cumulative effect of the activities relied on. The court should look at all the circumstances "in the round" (per Jonathan Parker J in Secretary of State for Trade and Industry v Jones[1999] BCC 336 ). 41. It is also important to look at the acts in their context. A single act might lead to liability in an exceptional case. 42. Relevant factors include: (i) whether the company considered him to be a director and held him out as such; (ii) whether third parties considered that he was a director. 43. The fact that a person is consulted about directorial decisions or his approval does not in general make him a director because he is not making the decision. 44. Acts outside the period when he is said to have been a de facto director may throw light on whether he was a de facto director in the relevant period. 45. In my judgment, the question whether a director is a de facto or shadow director is a question of fact and degree…"
“(a) Guidance should be obtained from looking at the purpose of the provision in question (Holland at [39]). The primary purpose of the disqualification legislation is the protection of the public. Those who assume the status and functions of a company director should be held to certain minimum standards in the public interest. The legislation has both a deterrent element and serves as an encouragement to improve standards of behaviour …I do not think that the purpose of the disqualification legislation is sufficiently different from the purpose of the legislation considered in Holland materially to affect the force of the observations in that case in a disqualification context. (b) There is no single test, but an important starting point is the company's corporate governance structure. The court is seeking to identify functions that were the sole responsibility of a director or board of directors, that is, the highest level of management of the company. Those who assume and exercise powers and functions that can only properly be exercised or discharged at that highest level of management will, consistent with the purpose of the disqualification legislation, be within its scope as de facto directors. Those who are subordinate and accountable to that highest level of management will not be. (c) The test has been described as whether the individual was participating, or had the ability to participate, in decision-making as part of the corporate governing structure (which I take to mean the highest level of management decision-making). Another way of putting it is to ask whether the individual was on an "equal footing" with others in directing the affairs of the company. (d) There is a distinction between being consulted about, advising on or otherwise being involved in, decision-making in some other capacity (even in circumstances where real influence is exerted) and actually participating in making a decision as a director. (e) The question is one of fact and degree. It must be determined objectively, by reference to what the relevant individual actually did (including, for example, whether they were held out as a director and whether they took major decisions), and looking at the cumulative effect of the activities relied on in their overall factual context.”
“Following our call of this am I now attach the final draft of the FCA response as per your instruction.”
“I now attach the above as dictated over the weekend. Please check it is as you wanted mate.”
“we still maintain HCA do not cold call or contact Clients through unsolicited post for example”
“We take the view that advice should not be treated as being confined to a consideration of the advantages or disadvantages of a particular investment without considering the wider financial or investment context in which the advice is given. Advisers should consider whether the entire replacement contract, including the investments that will be held within it, is more suitable for the customer than the original investment; if it is not, the SIPP is unlikely to be suitable.”
“Whatever the true situation I have serious doubts about the firm’s knowledge or due diligence on the funds albeit I have very little evidence to go on. To try to get a better understanding of the position I have asked the SIPP Operator for their understanding as they would seem to be the trustees to the pension funds… to see if they confirm the applicability of the twelve month notice period. However, if they confirm that the AIGO Bespoke Cautious Portfolio satisfies the thirty day realisation rule then my suggestion that the firm is breaching the VoP probably falls away. At the moment I still think we will prove that the underlying assets are non-standard. However, even if my worries about breaching the VoP fall away, it would still seem there is a case to consider. Firstly, as the firm has written over 400 of these cases over the last year, and virtually nothing else, it would seem inconceivable that there is not a suitability issue in the advice being given. Furthermore, in submitting information to me the firm has identified 19 pension transfer cases for which it does not have permission.”
“ Is he trying to see whether the SIPP recommendation has been based on using the SIPP for a particular asset held by the client?”
“Fact [find] States clients wishes for capital protection and fixed returns. There is only one provider and investment which offers this. Guinness Mahon. Their charges are 0.5% p.a. which is very cheap.”
“I would say they are trying to find out why a sipp and not a pp and how is it possible without justification. Have you done a cost comparison with a pp”
“You need to let them know what information is given to clients in relation to AIGO funds do all your sipp recommendations go into AIGO funds And have you advised on any other business not showing on the nbr” do all your sipp recommendations go into AIGO funds And have you advised on any other business not showing on the nbr”
“So that’s why they’re checking you !!!”
“No advice should be given to a client, and no transaction should be executed for a client… unless the adviser has on file, sufficient personal data about the client to provide evidence that the advice or the transaction is appropriate.”
“It is important through all fact-finding for the file/adviser to demonstrate the use of soft facts. Whilst fact finds gather key information even when completed well they do not tend to give a true picture of the clients circumstances and more importantly their objectives from the meeting. Reference should be made specifically to soft facts in the file review feedback.”
“The fact find should document the client’s current personal and financial details, and should gather sufficient soft facts about the client to be able to demonstrate a suitable knowledge of the clients’ circumstances and objectives. Reference should be made to emergency funds and how client’s circumstances would impact on this.”
“The clients’ financial objectives, goals and purpose of investment should be clearly and appropriately prioritised by both the adviser and the client. There should be sufficient hard and soft facts are noted in the Fact Find to clearly demonstrate how these objectives and priorities have been reached.”
“(4) A regulator may not take action under this section after the end of the relevant period beginning with the first day on which the regulator knew of the misconduct, unless proceedings in respect of it against the person concerned were begun before the end of that period. (5) For the purposes of subsection (4) – (a) a regulator is to be treated as knowing of misconduct if it has information from which the misconduct can reasonably be inferred; and (b) proceedings against a person in respect of misconduct are to be treated as begun when a warning notice is given to him under section 67(1). (5ZA) “The relevant period” is – (a) in relation to misconduct which occurs before the day on which this subsection comes into force, the period of 3 years, and (b) in relation to misconduct which occurs on or after that day, the period of 6 years.” (a) a regulator is to be treated as knowing of misconduct if it has information from which the misconduct can reasonably be inferred; and (b) proceedings against a person in respect of misconduct are to be treated as begun when a warning notice is given to him under section 67(1). (a) in relation to misconduct which occurs before the day on which this subsection comes into force, the period of 3 years, and (b) in relation to misconduct which occurs on or after that day, the period of 6 years.”
“332. The first of these is a subjective test which looks at the actual knowledge of the Authority. It relates to actual knowledge of the misconduct. That has to be construed by reference to s 66(1). For time to start running in this respect the Authority must have actual knowledge that the particular person against whom action is to be taken has either failed to comply with a statement of principle issued under s 64, or has otherwise contravened as provided by s 66(2)(b). 333. The second test – the inference test – is an objective test. It is whether, absent actual knowledge, the Authority ought, on the basis of the information available to it, and applying a test of reasonableness, to have inferred that the relevant person had failed to comply with a statement of principle or had otherwise contravened. 334. There is a particularity to each of these tests. It is not sufficient that the Authority has information in its hands that would give rise to a mere suspicion. Nor is it enough that the information might suggest that there was misconduct, but that the person in question has not been identified as the apparently guilty party. The Authority must either know or be treated, by reasonable inference, as knowing of the misconduct by a particular person. The reference in s 66(4) to “the misconduct” (our emphasis) clearly refers to the particular misconduct in respect of which action is to be taken against a particular person, and not to conduct of a similar nature in respect of which information may have been obtained earlier. 335. Questions will arise as to the degree of certainty required before time can be regarded as running. There is a clear purpose in s 66 that the Authority should be allowed a reasonable period to investigate before being required to issue a Warning Notice. Consistent with that purpose, and to provide a balance for the affected person, the time at which the limitation clock is set cannot be when the case has been fully investigated and the Authority is ready to proceed. Time must start running at an earlier stage in the process. 336. Some assistance on the correct approach can here be derived from the cases ons 14A of the Limitation Act 1980 . In Haward v Fawcetts, Lord Nicholls (at [9] and [10]) referred to the degree of certainty required before knowledge can be said to exist, and the degree of detail required before a person can be said to have knowledge of a particular matter. Referring to the guidance of Lord Donaldson in Halford v Brookes[1991] 1 WLR 428 , 443, it was noted that knowledge does not mean knowing for certain and beyond possibility of contradiction. It means knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice, and collecting evidence; suspicion, particularly if it is vague or unsupported, will indeed not be enough, but reasonable belief will normally suffice. In other words, the claimant must know enough for it to be reasonable to investigate further. As to the degree of detail required, what is necessary is not a full appreciation of all the relevant facts, but a “broad knowledge of the essence” of the relevant acts and omissions (Spargo v 35 North Essex District Health Authority [1997] PIQR P235, per Brooke LJ). 337. These principles are instructive, but not in our view determinative, of the construction of s 66(4). That construction must have regard to the context and the evident purpose of s 66. On that basis, for time to start running it is not necessary that the Authority has the full picture that would justify the issue at that stage of a Warning Notice. Although the Authority may only take action under s 66(1) if it appears to it that the relevant person is guilty of misconduct, the limitation period starts to run from an earlier time, when the Authority knows or has information from which the misconduct can reasonably be inferred. The Authority must, however, have sufficient knowledge of the particular misconduct, or such knowledge must be capable of being reasonably inferred, to justify an investigation. Mere suspicion is not enough, nor is any general impression that misconduct may have taken place. 338. There will be cases where information about possible misconduct will be received by the Authority piecemeal and over an extended period. At an early stage in the process such information may be inadequate for the Authority to know of a particular misconduct by a particular person, or to be able to infer such misconduct. A mere allegation or assertion unsupported by evidence would be unlikely to be regarded as sufficient to amount to knowledge of misconduct or as information from which it would be reasonable for the Authority to have inferred misconduct, although it might be expected to give rise to further enquiry. Knowledge of an allegation of misconduct is not the same as knowledge of the misconduct. As an investigation progresses more information may come to light as a result of which there comes a time when the Authority either knows, or it can reasonably be inferred from information which the Authority has, that there is substance to an allegation of misconduct in relation to a particular person. It is only at the latter stage that the time limitation begins to run in respect of that misconduct. Provided a Warning Notice is issued in respect of the misconduct within two (now three) years from the earliest time when the Authority knew of the misconduct or the misconduct could be reasonably inferred, the Authority may rely on all the information it is obtained both before and after that time.”
“The decision in Jeffrey indicates that in order for the limitation period to start running the Authority must know enough for it to be reasonable to investigate further, and that what is necessary is not a full appreciation of all the relevant facts but “a broad knowledge of the essence”: see [336] of the decision. However, these principles need to be applied in the context of the particular misconduct that is being alleged. In this case, the relevant misconduct is Mr Burns’s failure to appreciate that there was a conflict, and consequently the failure on the part of TMI to manage that conflict. It is apparent from our findings on the facts that the Authority had no knowledge of those matters until its further investigations that commence with its letter of20 December 2012 . As the Tribunal in Jeffrey said at [337] of its decision, the Authority must have sufficient knowledge of the particular misconduct, [emphasis added] or such knowledge must be capable of being reasonably inferred, to justify an investigation.”
“What they want is a compliant sign off on their documents and for us to append a level 4 qualified individual as signatory for the firm. We actually do nothing but get paid plus trail. They charge 3% of [which] they take 2% and we get 1%... We also are required to do a regular compliance visit to do file checking on whatever number and basis we require of our work but not less than monthly.”
“Who are these companies? Hennessy, Furness, Henderson?”
“All that he has said is that he must see the printed (scanned) actual BHIM documents before use to formally complete his file.”
“From a compliance point of view I cannot see any issues and you have been using these templates for a while without any problem so I say, if it ain’t broke don’t fix it!”
“1. How did we arrive at Avalon and subsequently Guinness Mahon for the SIPPs? 2. How did we arrive at Hennessy Jones portfolios for the clients?”
“Please note that BHIM never had any business relationship with HJL beyond the fact that it invested customer monies in HJ Bonds. The recommendation to invest in those bonds came through CAL, not HJL. In relation to each and every request relating to HJL, please note that BHIM’s position is that no such documentation exists.”
“This documentation does not exist. BHIM is a small business and has not historically kept formal board or committee papers as discussions were had on a frequent but informal basis and were not minuted or recorded in any formal way. There are no relevant documents in existence matching this request.”
“1. Provide the full company name; 2. Describe the nature of the business relationship with FSF; 3. Describe the activities that FSF conduct for BIM; and 4. Provide a Copy of any contractual agreement between BIM and FSF.”
“1. Robert knows them as FSS and he presumes that this is a trading title.” “2. The business relationship is that of an IFA and a lead provider only.” “3. FSS provide qualified leads for BHIM to progress only.” “4. To date BHIM only received leads that have been substandard and as such they do not have an agreed contract. Mr Ward is however keen to clarify that he would expect a statement with any agreed contract to the effect that FFS guarantees that no client passed to BHIM has been cold called. There is currently an ongoing issue with regards to the mechanism for the fee to be charged by FFS, and Mr Ward’s view is that if this is not resolved they will cease working with FFS and look for somebody else to work with.”
“If BHIM advises on pension switches where the assets concerned are to be transferred to a platform provider to be held under a SIPP wrapper would that be permitted under the terms of the Voluntary Requirement?”