R (C) v Financial Services Authority

May 12

[2012] EWHC 1417 (Admin)

The Administrative Court (Silber J) has held that a breach by the Financial Services Authority’s Regulatory Decisions Committee (the RDC) of its statutory duty to give adequate reasons for a decision may be challenged by judicial review. The availability of a full de novo review of the case by the Upper Tribunal is not a suitable adequate remedy for such a breach.

C held controlled functions at a Bank during the financial crisis. The FSA alleged that C had breached APER Principle 6 (due skill, care and diligence in management of firm). The RDC’s Decision Notice upheld the allegations, but did not explain why C’s detailed written and oral representations to the RDC had been rejected. The Decision Notice also failed to reflect concessions made by the FSA’s Enforcement Division since the issue of the Warning Notice.

The FSA argued that C had an adequate alternative remedy for the failure to give proper reasons: an appeal to the Upper Tribunal. Silber J disagreed:

106. In deference to the point made on many occasions by and on behalf of the FSA that if this claim for judicial review succeeds, such a decision would undermine the statutory regime, I must disabuse the FSA of this fear and should stress that although the Decision Notice in this case will be quashed, this does not mean that any challenge or indeed anything other than very few challenges to the decisions of the FSA can be the subject of successful judicial review applications.

107. The law is and has been as was stated by Mummery LJ in R (Davies) v Financial Services Authority (supra) and set out in paragraph 78 above. Indeed in the vast majority of cases, the Upper Tribunal provides a suitable alternative remedy especially when the challenge is to the content of a decision notice or when the challenge is to the correctness or the rationality of the actual decision. The present case constitutes an exception to this and the FSA can without difficulty avoid cases like the present one in the future simply by giving full and proper reasons.

108. I quash the decision of the FSA because the reasons in the Decision Notice were inadequate and the alternative remedy to a claim for judicial review of remitting the case to the Upper Tribunal is not in Lord Widgery’s words in the Royco case “equally effective and convenient” or in Taylor LJ‘s words in Ferrero “suitable to determine” the issue. That alternative remedy is in Lord Denning’s words in the Peachey case “nowhere near so convenient, beneficial and effectual” as the present claim for judicial review.

The Decision Notice was quashed and the matter will be remitted back to the RDC for reconsideration.

Dinah Rose QC and Ben Jaffey acted for C, instructed by Herbert Smith LLP.

The full judgement is available to download via the link listed on this page.

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Dinah Rose QC, Ben Jaffey

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