Identifying individuals in FCA regulatory notices – Macris applied
Back in March 2017, the Supreme Court handed down its decision in Financial Conduct Authority v Macris  UKSC 19. We have previously reported on that decision on its way to the Supreme Court and following the judgment.
In brief, Section 393 of the Financial Services and Markets Act 2000 (“FSMA”) provides individuals identified in an FCA notice with third party rights to be provided with a copy of the notice and an opportunity to make representations regarding the notice. Much then turns on whether an individual has been identified in the notice or not.
- Lord Sumption found that a person would be identified in a section 393 FSMA notice where “he is identifiable by name or by a synonym for him, such as his office or job title”. Where a synonym was used it must be clear from the notice that the synonym only related to one individual, and the individual must be identifiable from the notice itself or from publicly available information. Extrinsic information can only be used to help with interpreting the language used in the notice rather than supplementing it, i.e. it can only be used to the extent it is necessary to understand what the notice means.
- Lord Neuberger (agreeing with Lord Sumption) looked to the wording of section 393 FMSA itself, finding that the language used “appears to stipulate that the person must be identified in the notice, not that he must be identifiable as a result of the notice”. In that regard the notice must be “equivalent to naming him”.
In Cooper v Financial Conduct Authority  UKUT 0428 (TCC) the Upper Tribunal has had its first opportunity to apply the Macris decision, and in doing so found that Mr Cooper had not been identified. A two-stage approach to the question was used, considering each of the two tests identified above.
The primary issue for consideration by the Tribunal, also found in the FCA’s favour, was actually whether Mr Cooper should be permitted an extension of time to refer the question of whether he was identified in the decision notice, not the question of whether he had been identified in the notice.
Mr Cooper (appearing in person) submitted that the main reason for the delay in filing his complaint regarding the Final Notice (which was some 14 months after expiry of the 28 day period) was due to his ongoing dispute regarding his own Private Notice (a separate dispute in which Mr Cooper was eventually successful). Mr Cooper was considerably beyond the time limit for bringing this fresh challenge however, with Judge Timothy Herington identifying the statutory time limit of 28 days (pursuant to paragraph 2(2) of Schedule 3 to the Tribunal Procedure (Upper Tribunal Rules 2008)).
Despite Judge Herrington’s considerable sympathy for Mr Cooper, he found against Mr Cooper him on his time limit challenge, noting the importance of strictly adhering to time limitations. However, the question of identification was addressed, in recognition of the fact that the issues had been fully argued and because it was the first opportunity to consider the issue since Macris.
In reaching its decision, the Tribunal considered references in the Final Notice to “compliance oversight”, “compliance oversight systems and controls”, “compliance department’s oversight” and “compliance oversight process”. Mr Cooper held the compliance oversight function (CF 10) and there was no one else who held that post. A simple search of the FCA’s register would verify his position in this role. The Tribunal found that none of the references used in the Final Notice were neither references to Mr Cooper, nor synonyms, nor was there a reference to a position or office. The references were instead to processes carried out through the firm and did not therefore identify Mr Cooper.
For the same reasons, references to “Board” did not identify Mr Cooper for the purpose of section 393 FSMA. The Board was a collective reference to the directors and so could not be identifying one individual.
It was accepted by the Tribunal though that had “compliance oversight function” been used, that would have served to identify the individual holding the CF 10 function. In so finding, Judge Herrington commented “I am assuming that the test for identification assumes that the audience to whom the Final Notice is directed has some knowledge of the regulatory system and that the system provides for individuals performing particular functions to be approved by the Authority”, thereby making a reference which, under Lord Neuberger’s test, would make an individual identifiable from freely and publicly available information.
Judge Herrington did appreciate that one result of the application of this reasoning would be injustice felt by those individuals found not to be named, but where people in the industry or sector might consider that individual to have some responsibility for failings identified by the FCA, which the individual has not had an opportunity to contest. However, he found himself unable to depart from the wording of the statute as interpreted by the Supreme Court, commenting that the Tribunal must continue to apply the law in this way unless and until it is changed by Parliament.
No doubt individuals in key positions within firms which become subject to FCA regulatory notices will continue to test the limits of section 393 FSMA. We are likely to see further analysis of the Supreme Court’s identification test before too long. This case also provides further clarification for the FCA, both in drafting regulatory notices and when deciding whether to issue notices under section 393 FSMA.