David Price and Toni Fox-Bryant Both v The Financial Conduct Authority [2023] UKUT 00224 (TCC) [2023] UKUT 00224 (TCC)

UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
[2023] UKUT 00224 (TCC)
Between
TONI FOX-BRYANT DAVID BRIAN PRICEAppellantTHE FINANCIAL CONDUCT AUTHORITYRespondent
Before
UPPER TRIBUNAL JUDGE ANNE REDSTONDate 31 July 2023Category: Financial services
[1]Ms Fox-Bryant and Mr Price (“the Applicants”) were the owners and directors of CFP Management Ltd (“CFP”), a small financial services advisory firm. CFP had entered into arrangements with another company to provide advice relating to the transfer of pensions from defined benefit (“DB”) schemes to defined contribution (“DC”) schemes.[2]The Financial Conduct Authority (“the Authority”) carried out a review of a sample of CFP’s client files for the period from 21 April 2015 and 31 October 2017 (“the relevant period”), and notified CFP of the results of that review on 16 December 2020.[3]On 3 May 2023, the Authority issued a Decision Notice to Ms Fox-Bryant imposing a financial penalty of £681,536 under s 66 of the Financial Services and Markets Act 2000 (“FSMA”), making a prohibition order under s 56 of FSMA, and withdrawing her approvals under s 63 of that Act to perform senior management functions at CFP. On the same date, the Authority issued Mr Price with a Decision Notice imposing a financial penalty of £632,594 together with a prohibition order and the withdrawal of approval in similar terms and under the same statutory provisions as those in Ms Fox-Bryant’s Decision Notice.[4]The Applicants referred the Decision Notices to the Tribunal (“the References”). A hearing of the References will take place at a future date. They also made Applications that publication of the Decision Notices be prohibited pursuant to Rule 14 of the Tribunal Procedure (Upper Tribunal) Rules 2008 (“the Privacy Applications” and “the Rules” respectively). The Privacy Applications were heard in private under Rule 37(2) of the Rules, because a public hearing would have undermined their purpose. This judgment deals only with the Privacy Applications and not with the substantive matters raised by the References.[5]Having taken into account all relevant factors, I refuse the Privacy Applications. In summary this is because the Applicants did not provide “cogent evidence” that publication would cause them to suffer “disproportionate” damage, or that it would otherwise be “unfair” to publish the Decision Notices. THE EVIDENCE[6]Under agreed directions endorsed by the Tribunal, the Applicants were required to file and serve their evidence by 19 June 2023 and the Authority was required to file and serve its evidence by 29 June 2023, with skeleton arguments being exchanged three days before the hearing.[7]The evidence before the Tribunal consisted of witness statements from the parties filed in accordance with those directions; a chain of emails attached to Mr Fatchett’s skeleton argument, and oral evidence given by Mr Fatchett in the course of the hearing.[8]Mr Temple did not object to the emails being admitted into evidence, and I found it was in the interests of justice to do so, particularly as(a) they were between the parties to this appeal, and(b) the Authority had some prior notice that the Applicants would be seeking to rely on the exchange of correspondence. I consider Mr Fatchett’s oral evidence below. Evidence filed and served before the hearing[9]The evidence filed and served before the hearing consisted of the following:(1) Witness statements from Ms Fox-Bryant and from Mr Price. These included not only evidence of fact, but also their view as to how the law applied to the facts of their cases. Mr Fatchett, acting on their behalf, stated that he was not proposing to call either Applicant unless Mr Temple wished to carry out a cross-examination. On behalf of the 2 Authority, Mr Temple said that the passages setting out why the Applicants considered the Decision Notice should not be published were not agreed or accepted, but he did not need to cross-examine the Applicants on their factual evidence.(2) A witness statement from Ms Roshani Pulle, the Lead Associate in the Authority’s Enforcement Department. The exhibits to that witness statement included the Authority’s letter setting out the results of the client file review; Warning Notices issued to the Applicants on 20 January 2023, and various extracts from various financial services magazines. Ms Pulle also explained why the Authority does not agree that the Decision Notice should not be published. Mr Fatchett said he did not need to cross-examine Ms Pulle on her evidence of fact.(3) The email chain attached to Mr Fatchett’s skeleton argument, made up of: (a) the email of 16 December 2020 to the Applicants attaching the letter giving the results of the file review; this had been sent by Mr Derek Murdoch of the Authority and copied to Mr Fatchett; (b) an email dated 17 December 2020 from Mr Fatchett to Mr Murdoch, which was copied to others, including Ms Fox-Bryant and Mr Price; and (c) Mr Murdoch’s response of the same date, which was also copied to others, including Ms Fox-Bryant and Mr Price.[10]As is clear from the above, the Tribunal was not provided with the Decision Notices for the purposes of this hearing of the Privacy Applications. However, it was common ground that these were in the same terms as the Warning Notices (other than in relation to the quantum of the penalty, as to which see §35 below) and the hearing proceeded on that basis. Mr Fatchett’s evidence[11]Mr Fatchett provided oral evidence on the following matters:(1) the Applicants’ understanding of, and reliance on, the email from Mr Murdoch; and(2) the approach the Applicants would have taken, had the Decision Notices included only prohibition orders and withdrawal of approvals; in other words, had there been no financial penalties.[12]I considered whether it was in the interests of justice to admit Mr Fatchett’s evidence, noting that it was given by the parties’ legal representative rather than by the parties themselves; had not been provided in advance as required by the agreed directions; was not in a witness statement, and that none of the procedures for adducing hearsay evidence set out in the Civil Evidence Act s 2 had been followed.[13]I decided to admit Mr Fatchett’s evidence about the Applicants’ understanding of, and reliance on, Mr Murdoch’s email, having taken into account the following:(1) Rule 15(2)(a)(i) of the Rules allows the Tribunal to admit evidence “whether or not it would be admissible in a civil trial”.(2) Evidence of fact can be given by a party’s legal representative on matters with which they were concerned professionally, see for example Axnoller Events Ltd v Nihal Brake and Andrew Brake [2021] EWHC 2539 (Ch) at [13] and [14].(3) Mr Murdoch’s email was a reply to an email from Mr Fatchett; it was addressed to him, and was copied to the Applicants. 3(4) Mr Fatchett was representing the Applicants at the time of that email exchange, and so was in a position to say what they had understood from Mr Murdoch’s email.(5) Both Ms Fox-Bryant and Mr Price were present throughout the hearing, and did not disagree with Mr Fatchett’s evidence.(6) That evidence did not contradict or undermine anything in their witness statements.(7) Mr Temple did not object to Mr Fatchett giving evidence, and accepted what he had said as factually correct.[14]However, I decided not to accept the evidence given by Mr Fatchett about the approach the Applicants would have taken had the Decision Notices not included financial penalties.[15]I came to that conclusion having taken into account the power given by Rule 15(2)(a)(i), and despite recognising that a person’s intention is a question of fact, about which evidence can be given (see Edgington v. Fitzmaurice (1885) 29 Ch. D. 459 at p. 483). However, Mr Fatchett was not giving evidence about his own intentions, but about the Applicants’ intentions based on hypothetical facts, and his evidence undermined that given by the Applicants in their witness statements. I placed significant weight on that final factor.[16]I also considered, but placed little weight on, the following factors:(1) The Applicants did not comment on this evidence, despite being present at the hearing. It seemed to me that there could be a number of reasons for their silence: they may have agreed with Mr Fatchett; they may not have understood the import of that evidence in the context of their case, or they may have disagreed with him, but been daunted by the prospect of interrupting.(2) Mr Temple did not challenge Mr Fatchett’s evidence. This was however unsurprising, as it assisted the Authority’s case: Mr Temple described it as “undermining the entire application” and as “providing a full answer” to the Applicants’ written submissions.[17]I confirm that the outcome of the Privacy Applications would have been the same, had Mr Fatchett’s evidence on this second issue been admitted. FINDINGS OF FACT[18]On the basis of the evidence which was accepted and which has been summarised above, I make some limited findings of fact. I have tried to be careful only to make findings directly relevant to the Privacy Applications, and not to make definitive findings on disputed matters which will be explored in more detail on the hearing of the References. My findings are in any event without prejudice to the position that may be established after full consideration of all the evidence following the hearing of the References. Ms Fox-Bryant, Mr Price and CFP[19]Ms Fox-Bryant has worked in the financial services sector since 1979 and Mr Price since 1980. They are both associates of the Chartered Insurance Institute, Chartered Financial Planners and qualified Pension Transfer Specialists. Over their working lives they established a network of clients and contacts.[20]CFP was incorporated in 2011. Ms Fox-Bryant and Mr Price each owned half the shares and were its only directors. In June 2014, CFP entered into arrangements with another company (“Company A”) which provided financial planning software to independent financial advisers (“IFAs”). Although this software could be used when advising on pension transfers, many of Company A’s IFAs did not have the relevant regulatory permissions and so could not give pension transfer advice. 4[21]CFP and Company A established a joint venture (“Company B”), which on 25 June 2014, became an Appointed Representative of CFP. On the same date Ms Fox-Bryant became a director of Company B; Mr Price became a director on 15 July 2016. IFAs who did not have permission to give pension advice carried out initial fact finds and transferred that information and related documents to Company B, which outsourced the provision of pension transfer advice to CFP.[22]In 2017, the Authority started reviewing a number of companies providing advice on pension transfers, and began to review CFP’s files. At or around the same time, the Authority required Company A to suspend the execution of pension transfers carried out in conjunction with CFP. The publicity[23]In July 2017, Money Marketing published an article headed “who is the firm behind [Company A’s] DB transfer suspension”. The article named Ms Fox-Bryant and Mr Price, and said that CFP was “the link in the chain that holds permissions to carry out advice” and remained “on the hook if anything goes wrong with [Company A’s] components”.[24]In November 2017, Financial Planning Today reported that CFP had “agreed to cease pension transfers as of October this year following consultations with the FCA”; Citiwire carried a similar article. In May 2018, Money Marketing published a “blog” headed “what happened to [Company A’s] DB transfer partner”, naming CFP and saying it was “a two-man band advice firm” consisting of Ms Fox-Bryant and Mr Price. The review and the liquidation[25]Having carried out a review of 21 client files for the relevant period, the Authority concluded that suitable advice was given in two cases (10%); unsuitable advice was given in five cases (24%) and the remaining fourteen cases (67%) could not be assessed due to material information collection failings. On 16 December 2020, the Authority issued CFP with a letter to that effect; the letter was copied to Mr Fatchett.[26]At some point during the review process, CFP had told the Authority it was considering the appointment of a liquidator. The Authority’s letter of 16 December 2020 acknowledged this, saying:
“We appreciate that requesting you to take the steps outlined in this letter may be challenging in what is already a difficult situation. We have given these steps careful consideration, and are satisfied they are appropriate and necessary to protect consumers.”
[27]The “steps” referenced in that paragraph included requests that CFP provide the Authority with the following:(1) information on CFP’s resources, and the methodology it would use to redress the instances of unsuitable advice;(2) information on the resources and methodology CFP would use to obtain the missing information in cases assessed as having material information gaps;(3) information on the resources CFP had available to conduct a full review of its back book for the relevant period, to identify unsuitable advice; and(4) information on what resource was available to put things right for customers who had acted to their detriment in following unsuitable advice.[28]The following day, Mr Fatchett responded, saying: 5 “normally we would want to make representations on these reports. In this case…we are looking to appoint an insolvency practitioner in the next week. My clients have an enforcement action open and lack of response may be construed adversely. Do you have any suggestions as to what we can do in these circumstances to avoid this?”[29]Mr Murdoch replied the same day, saying:
“In terms of responding to our specific feedback and file review findings, in circumstances where the firm does not have the funds to consider and as appropriate respond to our feedback and request for review work, we would not expect the firm to do so. However, the impact of a lack of response from the firm would need to be considered by my Enforcement colleague along with any alternative means for them to gather the information they may require. For example, it may be possible for information to be requested directly from individuals.”
[30]Mr Murdoch ended his email by saying that in order for the possibility set out in the paragraph above to be fully considered, Mr Fatchett was to confirm by close of play the following day(a) whether CFP was entering a members or creditors liquidation, and(b) that it did not have the resources to respond to the Authority’s letter and to the requests contained in it. The Tribunal was not provided with Mr Fatchett’s response. Soon afterwards, CFP entered liquidation, and this was reported in the financial services press. The Warning Notice issued to Ms Fox-Bryant[31]On 20 January 2023, the Authority issued a Warning Notice to Ms Fox-Bryant. It said that the Authority would have proposed a financial penalty of £826,592 under s 66 of FSMA, consisting of £670,490 of “disgorgement” and £156,100 as a punitive element, but that as Ms Fox-Bryant had provided verifiable evidence that the full penalty would cause her serious financial hardship, the Authority had decided to limit the penalty to the disgorgement element. The “disgorgement” element means the financial benefit which the Authority had calculated Ms Fox-Bryant had received consequential upon the breach of the relevant regulations. Interest of £197,203 was included in the “disgorgement” figure.[32]The Warning Notice also said that the Authority was proposing to make a prohibition order under s 56 of FSMA, and to withdraw Ms Fox-Bryant’s approvals to perform certain functions at CFP under s 63 of FSMA. Under the heading “Representations”, it added:
“The person to whom this Notice is given has the right to make written and oral representations to the Authority. The deadline for making written representations and also for notifying the Authority of an intention to make oral representations is 30 January 2023 (or such later date as may be permitted by the Authority).”
The Warning Notice issued to Mr Price[33]On the same date, the Authority issued Mr Price with a Warning Notice proposing a financial penalty of £622,344. As with Ms Fox-Bryant, and for the same reason, this figure consisted only of the disgorgement element as calculated by the Authority, including interest.[34]The Notice also stated in similar terms and under the same statutory provisions as in Ms Fox-Bryant’s Warning Notice, that the Authority was proposing to issue a prohibition order and to withdraw Mr Price’s approvals to carry out certain functions at CFP; the same “Representations” paragraph was also included. 6 After the Warning Notices[35]Despite the invitations in the Warning Notices, the Applicants did not make any representations to the Authority. On 3 May 2023, the Authority issued the Decision Notices These were in essentially the same terms as the Warning Notices, other than that the penalty amounts were increased to £681,536 for Ms Fox-Bryant and to £632,594 for Mr Price. The increase was not explained to the Tribunal, but may have been due to the recalculation of interest.[36]By the time the Decision Notices were issued, Mr Price had retired and Ms Fox-Bryant was working in another regulated financial services firm; this remained the position at the hearing. There was no evidence before the Tribunal about their finances, and no details about Ms Fox-Bryant’s work or her employer. THE LAW[37]FSMA s 391 includes the following:
“(1A) A person to whom a decision notice is given or copied may not publish the notice or any details concerning it unless the regulator giving the notice has published the notice or those details.

(c) detrimental to the stability of the UK financial system…”

[38]Rule 14 of the Rules provides, so far as relevant:
“(1) The Upper Tribunal may make an order prohibiting the disclosure or publication of— (a) specified documents or information relating to the proceedings; or (b) … (2) The Upper Tribunal may give a direction prohibiting the disclosure of a document or information to a person if— (a) the Upper Tribunal is satisfied that such disclosure would be likely to cause that person or some other person serious harm; and (b) the Upper Tribunal is satisfied, having regard to the interests of justice, that it is proportionate to give such a direction.”
[39]There was no dispute between the parties that the principles relevant to privacy applications of this sort are set out in Prodhan v FCA [2018] UKUT 0414 (TCC) (“Prodhan”). That case also cites and relies on earlier judgments, including Arch Financial Products LLP v 7 FSA [FS/2012/20] (“Arch”); Ford v FCA [2015] UKUT 0220 (TCC) (“Ford”) and PDHL Ltd v FCA [2016] UKUT 0129 (TCC) (“PDHL”). Those principles are as follows:(1) FSMA s 391 gives rise to a presumption that Decision Notices will be published, albeit there must be regard to the fact that a Decision Notice under challenge in the Upper Tribunal is necessarily provisional (Prodhan at §20(1)).(2) The exercise of the Tribunal’s power to prohibit publication is a “matter of judicial discretion to be considered against this presumption” (Prodhan at §20(2)).(3) The exercise of this discretion involves a balancing exercise of all relevant factors and giving effect to the overriding objective of dealing with cases fairly and justly (Prodhan at §20(3)).(4) The open justice principle is to be applied such that the starting point is a presumption in favour of publication in accordance with the strong presumption in favour of open justice generally (PDHL at §36(1)).(5) The onus is on the applicant to demonstrate a real need for privacy by showing unfairness (PDHL at §36(2)).(6) The scales are thus heavily weighted in favour of publication. In order to tip the scales, the applicant must produce cogent evidence of how unfairness may arise and how it could suffer a disproportionate level of damage if publication were not prohibited (PDHL at §36(3)).(7) A ritualistic assertion of unfairness is unlikely to be sufficient. The embarrassment to an applicant that could result from publicity, and that it might lead the applicant's clients and others to ask questions which the applicant would rather not answer, does not amount to unfairness (PDHL at §36(4)).(8) If it is established by cogent evidence that publication of a Decision Notice would result in the destruction of, or severe damage to, a person’s livelihood, it would be unfair to publish that Notice (PDHL at §37, citing Angela Burns v FCA [2015] 5 UKUT 0601 (“Burns”) at [89]).(9) A “possibility” of severe damage or destruction is not enough; there must be a “significant likelihood” of such damage or destruction occurring (PDHL at §37, citing Burns at [90]).(10) An applicant is not required to show that damage or destruction is an inevitable consequence (PDHL at §37).(11) A risk of damage to reputation in unlikely to be sufficient to justify a prohibition on publication (Prodhan at §22).(12) The nature of the dispute, including questions as to whether the applicant has been treated fairly in comparison with others, or penalised too harshly, are matters to be considered by the Tribunal when it hears the substantive reference and are not matters that can bear upon the question of publication (Ford at [50]).(13) The fact that some information concerning the subject matter of a reference is already in the public domain is a factor which tends in favour of publication (Ford at [54]).(14) The protection afforded to an applicant who is concerned that readers of the decision notice might not understand its provisional nature is to refer the matter to the Tribunal (Prodhan at [26]). That paragraph is followed by this citation from Arch: 8 “50…..Mr Stanley…submits that it is likely that there will be an unreasonable body of investors, fuelled by high emotions as a result of what has happened to the Arch cru funds, who will fail to appreciate that the decisions are provisional and will assume that the Applicants are guilty of what is alleged.[51]The protection to which the Applicants are entitled in this situation is the right to have the allegations tested in this Tribunal which will in due course deliver a decision in public which will refute unfounded allegations. In addition the Decision Notices themselves set out in detail a summary of the representations that the Applicants made to the RDC which goes some way to explaining their side of the case. No doubt the media will be interested in hearing from the Applicants why they believe the allegations are unfounded.” THE PARTIES’ SUBMISSIONS AND THE TRIBUNAL’S VIEW[40]Mr Fatchett submitted that publication would be unfair because it rested on the Authority’s file review, which was itself unfair, and because it would cause damage to the Applicants. Mr Temple asked the Tribunal to reject those submissions for the reasons explained below. The file review[41]The case law requires that a person seeking to prevent publication of a decision notice must “produce cogent evidence of how unfairness may arise”. Mr Fatchett submitted that the Decision Notices issued to the Applicants were “unfair”, and their publication would therefore be unfair, for the following reasons:(1) The Decision Notices rested on the Authority’s file review, which had considered a very small sample of CFP’s files.(2) CFP had been unable to respond to the file review because it had gone into liquidation and the liquidator had “full possession” of CFP’s files.(3) The Applicants had understood from Mr Murdoch’s email that the Authority did not expect a response.(4) The file review related to CFP and not to the Applicants personally.[42]In response to those four points, Mr Temple said:(1) This was essentially a challenge to the correctness of the Decision Notices, which would be considered at the substantive hearing of the References; it was, he said, invariably the case that appellants who make a references to the Tribunal do so because they consider the decision notice issued to them to be wrong and therefore unfair.(2) It was not correct that the Applicants had not had an opportunity to respond to the file review: both were qualified pension specialists and could have engaged as individuals. Instead, they had not even responded to the Warning Notices.(3) The Applicants were wrong to understand from Mr Murdoch’s email that the Authority would draw a line under the issues identified by the file review. All the email said was that the Authority would not expect CFP to respond; that consequence necessarily followed from the fact that it was going into liquidation.(4) It was disingenuous to rely on CFP’s separate legal personality; the Applicants were CFP’s only shareholders and directors, and thus fully cognisant of the company’s operations; they were also responsible for its regulatory compliance.[43]I agree with Mr Temple that the Applicants will have the opportunity to challenge the correctness, and thus the fairness, of the Decision Notices at the substantive hearing of the Reference. That issue cannot be decided as part of this Privacy Application. The reasons the 9 Applicants decided to place CFP into liquidation, and their understanding of the import of Mr Murdoch’s email, do not change the position. Damage to the Applicants[44]Mr Fatchett submitted that if the Decision Notices were to be published, the “average reader” would think the sanctions contained within it had already been imposed. Mr Temple responded by saying that when the Notice was published, it would be prefaced with an appropriate rider to show it was under appeal, and that “any objective reader would know that the matter is subject to judicial proceedings and that the matter is not closed”. I agree for the reasons explained in the case law, see §39(14) above.[45]Ms Fox-Bryant said in her witness evidence that publication would “ruin” her professional career, as the damage caused would be “irreversible”, Mr Temple submitted that this evidence “does not come close to meeting the evidential threshold of cogent and compelling evidence of unfairness and a disproportionate level of damage if publication is not prohibited” and that she had provided “no real information about her current career, or finances, or how either would be impacted by publication”. In relation to Mr Price, Mr Temple said that he had had entirely failed to meet the requirement of providing “cogent evidence” of “severe damage”, adding that this was unsurprising as he had retired. I agree with Mr Temple that the Applicants have fallen well short of the thresholds set out in the case law.[46]Finally, Mr Temple emphasised that there had already been publicity about the FCA review and this was a further factor in favour of publication; the reason why Company A ended its relationship with CFP; the fact that the Ms Fox-Bryant and Mr Price were directors of that company, and the consequential liquidation, were all facts already in the public domain. That Mr Temple is correct in this submission is clear from the case law cited at §39(13) above. OVERALL CONCLUSION AND NEXT STEPS[47]In exercising my discretion I must carry out a balancing exercise. The starting point is the strong presumption in favour of open justice generally, and thus in favour of publication. In the Applicants’ case there is very little on the other side of the scales to displace that presumption in this case, and certainly nothing of sufficient weight. Essentially, the Applicants have failed to demonstrate a “real need for privacy” by providing “cogent evidence” that publication would cause them to suffer “disproportionate damage”, or that it would otherwise be “unfair” to publish the Decision Notices. The Privacy Applications are therefore refused.[48]As is normal practice in such cases, the Authority is to ensure that any publicity given to the Decision Notices makes it clear that the decisions are provisional, and any press release issued by the Authority in connection with their publication must state prominently at their beginning that:(1) the Applicants has referred the matter to the Tribunal, and the Decision Notices are therefore provisional;(2) at the Tribunal hearing each party will present their respective cases, and the Tribunal will then determine whether the Authority acted appropriately. Having done so, the Tribunal will remit the matter to the Authority with such directions as it considers appropriate to give effect to their determinations; and(3) any reference to findings made in the Decision Notices must be prefaced with a statement to the effect that they reflect the Authority's view as to how the behaviour in question is to be characterised. 10[49]This judgement will be published on the Tribunal’s website, but only after the Decision Notices themselves have been published. The Authority is therefore directed to inform the Tribunal when publication has occurred. ANNE REDSTON UPPER TRIBUNAL JUDGE Release Date 31 July 2023

Cited in 4 later judgments