Out-Law News | 18 Jun 2013 | 4:53 pm | 2 min. read
Chris Willford had brought a claim for judicial review against the Financial Services Authority (FSA), after its Regulatory Decisions Committee (RDC) fined him for risk management failings in relation to the share rights issue which led to the bank's part-nationalisation in 2008.
Judicial review expert Julian Sladdin of Pinsent Masons, the law firm behind Out-Law.com, said that Willford's claim had been unsuccessful because there was a statutory mechanism in place by which FSA decisions could be appealed to the Upper Tribunal, rather than the courts.
"Judicial review is a remedy of last resort and is unlikely to be available if alternative remedies, which could provide adequate redress, have not been properly explored or exhausted," he said.
"In this case, while the Court of Appeal re-affirmed the general principle that regulatory bodies exercising public functions, such as the FSA, are amenable to judicial review, it would not accept jurisdiction if an alternative FSA statutory scheme, which could provide an adequate remedy, existed but had not been exhausted by Mr Willford," he said.
The FSA was dissolved and its conduct and compliance functions taken on by the Financial Conduct Authority (FCA) in April this year. As the statutory regulator of the financial services industry, its responsibilities included ensuring that those who carry out important roles were properly qualified and adhered to appropriate standards. It had the power to take action against those who failed to comply with its rules, including financial penalties.
In its case against Willford, the regulator alleged that he had failed to ensure that the bank's finance department brought potentially important information to his attention, and that he had not made sufficient enquiries about what information was available, ahead of the bank issuing the trading statement it based its share rights issue on. Willford had also not reviewed the last financial results pack, the FSA said. When bringing his claim for judicial review, Willford argued that the FSA's reasons for its ruling were "inadequate".
Although the High Court had allowed Willford's claim, Lord Justice Moore-Bick at the Court of Appeal said that this was "not a case in which the court should exercise its discretion to entertain a claim for judicial review". He also rejected Willford's request to publish the judgment in a "redacted and anonymised" form, as the High Court had done.
"The purpose of establishing the FSA to regulate the financial services industry and associated markets was to place responsibility for ensuring the maintenance of high standards in the hands of an expert body," he said. "It would be surprising, therefore, if Parliament had intended that disputes relating to procedure adopted by the FSA should be reviewed by the courts, save in the most exceptional cases."
"The argument that the [Upper Tribunal] is incapable of giving Mr Willford the remedy he needs in this case is, I think, overstated. It is true that the tribunal cannot quash the Decision Notice and remit the matter to the RDC for it to give better reasons, but it can reconsider the whole matter afresh and thus deal with the substance of the allegations against him," he said.
Judicial review expert Julian Sladdin said that the fact that the Court of Appeal overturned the anonymity order highlighted the "reputational risks" of escalating matters to the courts, particularly when an adequate alternative remedy was available.
"The Court of Appeal refused Mr Willford's request for anonymity in the proceedings as this was inconsistent with the principles of open justice," he said. "Had he decided to proceed through the FSA's statutory scheme instead his case would have been heard in private and his identity protected."