‘Further or alternatively, the same facts and matters demonstrated a lack of due skill, care and diligence, contrary to Statement of Principle 2 in APER. The Authority recognises that this alternative case was not expressly raised with the RDC, but considers it to be inherent in the facts and matters that were raised.’
“(1) The FCA may make a prohibition order if it appears to it that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by — (a) an authorised person …”
“(1) The FCA may withdraw an approval under section 59 given by the FCA or the PRA in relation to the performance by a person of a function if the FCA considers that the person is not a fit and proper person to perform the function.”
“(1) For the purposes of action by the FCA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person. (2) Condition A is that— (a) the person has at any time failed to comply with rules made by the FCA under section 64A, and (b) at that time the person was— (i) an approved person, (ii) an employee of an authorised person, or (iii) a director of an authorised person.”
‘The FCA's penalty-setting regime is based on the following principles: (1) Disgorgement - a firm or individual should not benefit from any breach; (2) Discipline - a firm or individual should be penalised for wrongdoing; and (3) Deterrence - any penalty imposed should deter the firm or individual who committed the breach, and others, from committing further or similar breaches.’
‘The FCA will seek to deprive an individual of the financial benefit derived directly from the breach (which may include the profit made or loss avoided) where it is practicable to quantify this. The FCA will ordinarily also charge interest on the benefit. Where the success of a firm’s entire business model is dependent on breaching FCA rules or other requirements of the regulatory system and the individual’s breach is at the core of the firm’s regulated activities, the FCA will seek to deprive the individual of all the financial benefit he has derived from such activities.’
“(5) In the case of a disciplinary reference or a reference under section 393(11), the Tribunal— (a) must determine what (if any) is the appropriate action for the decision- maker to take in relation to the matter; and (b) 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 10 (b) remitting the matter to the decision-maker with a direction to reconsider and reach a decision in accordance with the 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.”
‘… of little relevance to say that no lender suffered actual loss: the point is that they should have had the opportunity to decide whether to continue to lend with new entities, such as companies, were being inserted into the purchasing process and when the funds being lent were not always being held to the order of the lenders nor were they being applied strictly as they should have been in the course of the purchasing process and as they would have intended. Moreover, some lenders may well, for reputational reasons, have not wished to involve themselves in such transactions at all: and at the least should have been given the chance to decide’
‘A firm must act honestly, fairly and professionally in accordance with the best interests of its client (the client's best interests rule).’
‘(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.’
“If a firm does not obtain the necessary information to assess suitability, it must not make a personal recommendation to the client or take a decision to trade for him.”
‘In particular, the comparison should: (1) take into account all of the retail client's relevant circumstances; (2) have regard to the benefits and options available under the ceding scheme and the effect of replacing them with the benefits and options under the proposed scheme; (3) explain the assumptions on which it is based and the rates of return that would have to be achieved to replicate the benefits being given up; (4) be illustrated on rates of return which take into account the likely expected returns of the assets in which the retail client's funds will be invested; and (5) where an immediate crystallisation of benefits is sought by the retail client prior to the ceding scheme’s normal retirement age, compare the benefits available from crystallisation at normal retirement age under that scheme.’
“8.8 TVA methodology is based on the concept of replicating the benefits of a DB scheme via a personal or stakeholder pension, followed by annuity purchase. Essentially, the process involves projecting the value of the deferred benefits at retirement, allowing for revaluation, estimating the cost of purchasing those benefits via an annuity, then determining the rate of return that would need to be achieved on the cash equivalent transfer value to enable that annuity purchase. That rate of return will then be considered relative to the customer’s attitude to risk, among other things, as part of the suitability process. 8.9 The process involves a significant number of assumptions about: • Revaluation rates of benefits accrued at separate times, and subject to different and, sometimes, complex caps and collars. • Future annuity interest rates, for different shaped annuities. • Future mortality.”
“When advising a retail client who is, or is eligible to be, a member of a defined benefits occupational pension scheme or other scheme with safeguarded benefits whether to transfer, convert or opt-out, a firm should start by assuming that a transfer, conversion or opt-out will not be suitable. A firm 15 should only then consider a transfer, conversion or opt-out to be suitable if it can clearly demonstrate, on contemporary evidence, that the transfer, conversion or opt-out is in the client's best interests.” (2) COBS 19.1.7G (as in force from8 June 2015 ) provided that: “When a firm advises a retail client on a pension transfer, pension conversion or pension opt-out, it should consider the client’s attitude to risk including, where relevant, in relation to the rate of investment growth that would have to be achieved to replicate the benefits being given up.” (3) COBS 19.1.7AG (as in force from8 June 2015 ) provided that: “When giving a personal recommendation about a pension transfer or pension conversion, a firm should clearly inform the retail client about the loss of the safeguarded benefits and the consequent transfer of risk from the defined benefits pension scheme or other scheme with safeguarded benefits to the retail client, including: (1) the extent to which benefits may fall short of replicating those in the defined benefits pension scheme or other scheme with safeguarded benefits; (2) the uncertainty of the level of benefit that can be obtained from the purchase of a future annuity and the prior investment risk to which the retail client is exposed until an annuity is purchased with the proceeds of the proposed personal pension scheme or stakeholder pension scheme; and (3) the potential lack of availability of annuity types (for instance, annuity increases linked to different indices) to replicate the benefits being given up in the defined benefits pension scheme.” (4) 37.4 COBS 19.1.7BG (as in force from1 May 2012 ) provided that: “In considering whether to make a personal recommendation, a firm should not regard a rate of return which may replicate the benefits being given up from the defined benefits pension scheme or other scheme with safeguarded benefits as sufficient in itself.”
“One case I looked at on the review on the [Client A] file, and when he had his income requirements now and his income requirements in retirement, I could see he had almost halved his basic outgoings for council tax rates, electricity, and other utilities. And that is not viable. They don't go down that much in retirement. So, there are certain instances where the clients, even when they think they know what they need, that they still not the right -- you are not going to get to the right number.”
“It's a question that you, with hindsight, possibly would have got more data on, but the clients that we were dealing with, I think most of them don't know what they are going to need in retirement. … It's a subjective thing depending on what their requirements are. … [T]heir requirements will change. That is the point of ongoing financial advice and regular reviews.”
“[T]he PIA came out with rules and you followed them, and there is a set format. Whereas the FCA's rules were -- they were not rules. It is -- I know they are in the rulebook, but it is more -- it never seemed to us as advisers that those PIA (inaudible) FCA, it's here's the guidance, here is the rules, but it is advisers are perhaps more left to interpret them and -- no, that is not even quite right. The PIA gave strict "this is what you do". Whereas the FCA, it is guider notes, consultation papers, you have got the rulebook and there is not the same forceful "do this, do that". It is consideration.”
“Q: Did you take any advice from anybody about how to build the system? A: Not specifically. I mean, it kind of --it was a bit organic to start with, because as I say, we were talking about it for two years before we actually started it. So it was a bit organic. We looked at that, our existing CFP business model, and I suppose used that as a -- a starting point, but we were trying to - - working with SBS as well, Selectapension, trying to -- something that we all felt that we could work with, and as I say, we did have a compliance consultant at that time that we talked to. As I say, at that time when we were doing it, we had no idea that the pension freedoms would come out, and it would be such a larger scale. Q: What sort of advice would you get from the compliance consultant? A: Just generally. As I say, we went on some courses by providers, different industry people, just talk to them generally about -- we had already been doing some DBs, transfers ourselves in the past, so we had a CFP sort of model. We just sort of worked on from that.”
“There were one or two who never went back to their introducer, and so CFP took them on as ongoing clients, to make sure that they were still getting that ongoing advice, because that wasn't the SBS model, but that fell into the CFP model. It wasn't many, because, you know, the whole point of this, the introducer wanted to get the clients into a DC environment, talk about them - - to them again about all of their ongoing retirement planning, and dealing with anything that might have come out of that. …”
“Q So you as the adviser weren't meant merely to warn the client but to ensure to your satisfaction that they could bear the risk, is that right? A Yes, very well, yes. Q So if a transaction creates risks in excess of a client's capacity for loss, then you can't meet this obligation, can you? A I think you can make clear to the client what he is losing but what he is gaining is so very important to him then he has to accept he has to be prepared to make this -- to make this loss or to take this risk. Q So it's your view, is it, that it can be in the client's best interests to take a transaction even though they can't bear the risks of that transaction? A I think the client may know his own best interests best, but we must make clear to him what he is taking on.”
“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.”
“The foregoing cases suggest that a wider principle is emerging, that transactions entered by a defendant do not count as detriment if they can be unwound: in the words of an Australian judge, a qualifying change of position “must be legally or practically irreversible or there must be significant difficulties in reversing the change”
“the liability to tax should not in my view be allowed as a defence except to the extent that Hillsdown is unable to recover the tax. The Commissioners of Inland Revenue were not represented before me and there was no argument as to the recoverability of the tax paid. The fact that the tax was actually paid by the HF trustee on behalf of Hillsdown is neither here nor there. The liability to tax was Hillsdown's and there is no relevant change of position in having to pay the tax leviable on the footing that the transaction was lawful. On the other hand, I do accept that Hillsdown should not be made to account for irrecoverable tax. But that would merely be mitigation of liability and not enough to ground a defence on change of position.”
“determine the relevant interest rate, and the date from which it will apply, on a case by case basis. In deciding what interest rate to use, we may have regard to the interest rates applied by the Financial Ombudsman Service and the civil courts.”
“Step 1: The Authority calculates an amount of£186,933 to deprive Mr Page of the financial benefit derived directly from his breaches of Principle 1, inclusive of interest calculated as described below, up to the date of Mr Page’s Decision Notice. The Authority seeks continuing interest on the principal amount of that benefit at the rate of 8% per annum from the date of the Decision Notice, consistent with the policy set out in DEPP 6.5B.1G which states that the Authority will ordinarily charge interest on the amount of the benefit. The rate of 8% per annum is consistent with the judgment debt rate of 8% simple per year unders 17 Judgements Act 1838 (as amended by Article 2Judgements Debts (Rate of Interest) Order 1993 ). This rate of interest is also consistent with the amount of interest typically awarded by the FOS and in our view is the appropriate rate to be applied in the current circumstances.”