Thought for the Week -What's in a press release? The FCA's costly trouble with the Upper Tribunal

A lot of eyebrows were raised earlier this year when the FCA issued two press releases in response to a pair of adverse decisions from the Upper Tribunal in the Markou and Seiler and Whitestone case. 

"Incorrect and irrational" decision

Following to the Markou decision in April, the FCA issued a terse three-sentence statement noting that the FCA believed that the decision was "incorrect and irrational" and indicating that permission to appeal would be sought.  

Two months later, following the Seiler and Whitestone decision, the FCA issued a similarly combative statement, apparently seeking to minimise the substantial and widespread criticism of the FCA. Many that read the full decision at the time felt the regulator's press release did not quite meet the test of "clear, fair and not misleading".  

Some may consider it ironic that this apparent lack of respect for the Upper Tribunal's adverse decisions came at a time when the new leadership within the FCA's Enforcement Division were busy lecturing firms (and their lawyers) on the importance of "doing the right thing".

Costly criticism

It is apparent that, as concerns Seiler and Whitestone, the FCA's press release did not go unnoticed over at the Upper Tribunal.  In a follow up decision on costs issued on 9 November 2023, the FCA was held to have acted unreasonably, both at the RDC level (in making part of the finding against the individuals) and in the conduct of the proceedings.  Particular criticism was levelled at the FCA for the limited steps taken to obtain cooperation from relevant witnesses – such efforts being described by the Upper Tribunal as "utterly feeble".  Serious criticism was also directed at the regulator for failing to be open with the Upper Tribunal as to the steps it had taken. These were some of the grounds for an extremely rare adverse costs order against the FCA for part of the applicants' legal costs before the Upper Tribunal.

"Disgraceful" press release

And yet it is the Upper Tribunal's postscript to its decision, commenting on the FCA's earlier press release in the case, which is most remarkable.  The Upper Tribunal referred to the FCA's June press release as being "highly inappropriate". This was for a variety of reasons.  The press release had begun by stating "We have already had a successful outcome in this case…", which was misleadingly referring to the settled notice against the firm rather than the individuals who were the subject of these proceedings.  The press release had unfairly placed emphasis on the fact that the Tribunal had been critical of the conduct of the individuals, while no mention was made of the fact that the FCA was discontinuing its disciplinary and prohibition actions against the individuals.  The statement also downplayed the extent of the FCA's substantial disclosure failings in the case, wrongly indicating that only one document of relevance had been missed.  Much to the Upper Tribunal's annoyance, the FCA also departed from its usual practice of including a link to the Upper Tribunal decision.  

The Upper Tribunal concluded by stating that "In short, the statement was nothing short of disgraceful and should never have been made."  It resulted, according to the Upper Tribunal, from one of two possible causes - either a clear failure of systems and controls within the communications team at the FCA, or (if it had been signed off by Enforcement before publication) then there "had clearly been a serious error of judgment on its part".

The postscript ends by observing "I trust that never again will the Authority seek to give such a misleading impression of the result of a Tribunal decision and that it will act fairly, as it usually does, in summarising the results of a decision and providing an appropriate link to that decision".

Future relationship

This significant and, it appears, mutual loss of trust and confidence between the regulator and the Upper Tribunal is an unhealthy development.  We hope it is short-lived.  If either of these cases come to be heard by the Court of Appeal, no doubt it will take a more sanguine approach, and may well reverse some aspects of the Upper Tribunal's findings. In any event, we hope that in due course the FCA can return to a more constructive relationship with the Upper Tribunal, regardless of the extent to which the two bodies have different views on the cases they are handling.

Authors: Nathan Willmott and Anna Varga