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The Upper Tribunal rules against the FCA and the PRA in the Stuart Forsyth case

Jul 8, 2021 | ABI

Link(s): Stuart Malcolm Forsyth v (1) The Financial Conduct Authority and (2) The Prudential Regulation Authority [2021] UKUT 0162 (TCC)

Context

Upper Tribunal Judge Timothy Herrington, as part of a 98-page published decision, said “Our evaluation of our factual findings leads to the conclusion that they cannot support any finding of a lack of integrity on Mr Forsyth’s part.” The Tax and Chancery case centred on whether Mr Forsyth, in his previous capacity as chief executive of the Scottish Boatowners Mutual Insurance Association (SBMIA), demonstrated a lack of integrity in relation to issues arising out of his wife’s employment by the small mutual insurance firm. The proceedings arose out of the FCAa’s and the PRA’s respective decisions in 2019 to prohibit Forsyth from performing any function in relation to regulated activities. The FCA also imposed a £78,318 fine; the PRA, £76,180.

Key points to note

  • Mr Forsyth had always maintained that he acted properly, that everything he did was with his employer’s full knowledge and understanding, and that he did not at any time seek to mislead the PRA.
  • In response to the ruling, the PRA is reported to have said that it accepts the findings that it took a ‘flawed approach’ in relation to identifying material held in the case, and that the errors resulted in the late disclosure of certain materials, for which it has apologised to both Mr Forsyth and to the court.
  • The PRA added that the Upper Tribunal has referred this matter back to the PRA, which will consider the matter in light of the Upper Tribunal’s finding that Mr Forsyth did not act without integrity.
  • The FCA has updated its web page in relation to this case, and has acknowledged that the Upper Tribunal has found that it had not made out its case that Mr Forsyth had failed to act with integrity.  The FCA has confirmed that the Tribunal has directed that the FCA should not impose a financial penalty on Mr Forsyth, and that the Tribunal has in effect passed the case back to the FCA so that the proposed prohibition order can be reconsidered in light of the Tribunal’s decision.
  • The FCA acknowledges that the Tribunal has made a number of recommendations to the FCA which it will consider carefully. The FCA accepts that errors were made resulting in the late disclosure of certain internal documents relevant to the issue of limitation. The FCA has apologised to Mr Forsyth and the Tribunal for those errors.

Next actions

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