FCA bans financial adviser for actions outside the workplace

Out-Law News | 07 Apr 2021 | 1:39 pm | 2 min. read

The UK’s Financial Conduct Authority (FCA) has issued a decision notice withdrawing approval for an independent financial adviser to perform regulated functions after he was found guilty of attempting to meet a child following sexual grooming.

Although Jon Frensham’s actions were unrelated to work, employment law expert Anne Sammon of Pinsent Masons, the law firm behind Out-Law, said the decision demonstrated that the FCA would make adverse findings on fitness and propriety, and withdraw approval to perform senior management functions, where events that occur outside of the workplace demonstrate a lack of integrity.

The FCA said Frensham was not a fit and proper person (20 page / 839KB PDF) to perform any function in relation to any regulated activity as he lacked the necessary integrity and reputation. As a result, he posed a risk to consumers and to confidence in the financial system.

The FCA rejected Frensham’s argument that the acts which showed a lack of integrity and for which he was convicted were carried out over a short period of time in 2016 and did not mean that he lacked integrity at the present time.

While it acknowledged the passage of time since the offence, the FCA said it had given weight to the seriousness of the offence, which involved exploitation, an abuse of a position of trust and a deliberate and criminal disregard for appropriate standards of behaviour.

Frensham said he had always acted with integrity in his professional life and there was no real risk of his integrity being called into question in any way that was relevant to his professional work.

The FCA said the conviction was not irrelevant to his role as a financial adviser, which was a position of trust. Even though the conviction did not relate to something that had occurred at work, it involved him deviating from legal and ethical standards and seeking to exploit those more vulnerable than himself, and the FCA considered this to be fundamentally incompatible with Frensham’s role as a financial adviser.

Sammon said the decision could be compared to the November 2020 decision of the High Court in a case concerning solicitor Ryan Beckwith. In 2019 the Solicitors Disciplinary Tribunal found Beckwith had breached principles concerning integrity and trust in the legal profession after an incident involving sexual activity with an intoxicated junior female colleague.

However, the High Court overturned the tribunal’s findings, saying the solicitors’ code of conduct did not have “unfettered application across all aspects of a solicitor's private life”.

Sammon said the Beckwith case raised the issue of the extent to which it is legitimate for professional regulation to consider issues relating to a regulated individual’s personal life, and that the Frensham case suggests that the FCA may be willing to still do so.

“The Frensham case is, however, a rather extreme example and it will be interesting to see what approach is taken in future cases,” Sammon said.

Frensham has appealed the FCA decision notice to the Upper Tribunal, meaning the FCA’s actions are currently provisional.