Greystoke & Anor v The Financial Services Authority

The Court of Appeal refused an oral renewal of permission to appeal against a decision of the Financial Services and Markets Tribunal. The tribunal had found that Atlantic Law LLP and Mr Greystoke breached the FSA conduct of business rules (in particular rule references relied on in the judgment: 3.8.4R(1) and 3.12.6R(2) and a separately cited Rule 3.84(1)), and that Mr Greystoke was knowingly concerned or reckless in relation to approvals of non‑real time financial promotions. The tribunal imposed prohibition and withdrawal of approval orders under sections 56 and 63 of the Financial Services and Markets Act 2000 and financial penalties set in accordance with the Decision Procedure and Penalties manual (DEPP).

The Court held there was no arguable point of law: the tribunal had conducted a fact‑finding hearing required by Article 6 ECHR, its findings of insufficient due diligence, recklessness and lack of credibility were supported by evidence, and Fox Hayes [2009] EWCA Civ 76 was binding on the court. The tribunal considered the DEPP guidance about not imposing penalties to render a person insolvent but concluded that potential insolvency was not determinative, and the Court found no error of law or perversity in that exercise of discretion.

Background and parties: The Financial Services Authority issued two regulatory notices on 14 May 2009 imposing penalties of £200,000 on Atlantic Law LLP and £200,000 plus a prohibition and withdrawal of approval on Mr Greystoke personally, for approving non‑real time financial promotions issued by four Spanish companies that targeted United Kingdom private investors. Atlantic Law and Mr Greystoke referred the notices to the tribunal, which heard evidence and made findings of fact and sanctions. Mr Greystoke sought permission to appeal to the Court of Appeal on a point of law.

Nature of the application: The appellant sought permission to appeal the tribunal's liability findings and the level and principle of the financial penalties, contending that the regulator had a duty to warn, that the tribunal misapplied or that Fox Hayes effected a change in the law, and that DEPP guidance required avoidance of penalties that would render the person insolvent.

Issues framed by the court:

• Whether there was any arguable question of law in relation to the tribunal's findings of liability for breaches of the conduct of business rules.
• Whether the tribunal misapplied DEPP and was wrong in principle to impose penalties that might render the applicants insolvent.
• Whether Fox Hayes changed the law so as to give an arguable ground of appeal.
• Whether the regulator owed the appellants a duty to warn them of concerns about the overseas promoters.

Court's reasoning and conclusion: The Court observed that the tribunal was a first instance fact‑finding body whose determinations were supported by evidence (including findings that Atlantic Law took little due diligence, made superficial enquiries, and that Mr Greystoke was not a credible witness). Fox Hayes was binding authority on the proper application of the promotional rules and on the regulator's lack of duty to give guidance. The tribunal had considered the DEPP provision which states that penalties should not be intended to render a person insolvent, but had weighed that alongside the gravity of breaches and victims' losses and reached a discretionary conclusion. The Court concluded there was no arguable point of law nor any basis to say the tribunal's penalty exercise was perverse, and therefore refused permission to appeal.

Procedural note: The hearing before the tribunal was treated as a full first instance hearing so as to satisfy Article 6 requirements.

The application for permission to appeal was refused. The court held there was no arguable point of law: the tribunal's factual findings and discretionary exercise on sanctions, including its consideration (but non‑determinative view) of DEPP guidance on insolvency, were supported by evidence and not perverse; Fox Hayes was binding and did not give rise to a change of law favourable to the appellants.

The decision under challenge was that of the Financial Services and Markets Tribunal given on 11 May 2010; the present matter was an oral renewal of an application for permission to appeal to the Court of Appeal from that tribunal/Upper Tribunal decision. Permission to appeal was refused by the Court of Appeal on 13 January 2011.