C, R (on the application of) v Financial Services Authority (FSA)

A statutory decision-maker must give intelligible and adequate reasons addressing the principal important controversial issues. Where a decision rejects substantial representations, the reasons must explain in general terms why those representations were not accepted. A statutory appeal or reference will not necessarily be an adequate alternative remedy if it cannot cure the failure to give reasons and the absence of reasons substantially prejudices the applicant’s decision whether to pursue that remedy. Judicial review remains exceptional in challenges to Financial Services Authority decisions, but is available where the statutory alternative is neither capable nor suitable to remedy the particular wrong.

The claimant sought judicial review of a Decision Notice issued by the Financial Services Authority under section 67 of the Financial Services and Markets Act 2000. The notice censured him and imposed a £100,000 penalty for breach of Statement of Principle 6. He alleged that the Regulatory Decisions Committee had failed to give adequate reasons, particularly for rejecting his detailed written and oral representations and for failing to address changes in the FSA’s case.

The FSA argued that the reasons were adequate and that any challenge should be pursued by reference to the Upper Tribunal under section 67(7). The central issues were whether the reasons were legally adequate and, if not, whether the Upper Tribunal reference constituted a suitable alternative remedy.

1. The claim succeeded. The Decision Notice was inadequately reasoned and was quashed.
2. Under section 388(1)(b) of the Financial Services and Markets Act 2000, reasons must explain why the decision was made and what conclusions were reached on the principal important controversial issues. They must generally explain why substantial representations and the claimant’s account were rejected. A decision which merely adopts the regulator’s case does not satisfy that duty.
3. The required degree of particularity depends on the issues. Reasons need not address every consideration, but they must be intelligible and adequate and must not leave substantial doubt about the decision-maker’s reasoning. Failure to explain why detailed representations were rejected was material here. The Decision Notice also failed to address changes in the FSA’s case and matters said to have been conceded.
4. The claimant had to show substantial prejudice. That requirement was satisfied because adequate reasons were needed to make an informed decision whether to refer the matter to the Upper Tribunal, where the case would be reheard de novo and increased allegations or penalties remained possible.
5. The Upper Tribunal could determine the merits but could not require the Regulatory Decisions Committee to remedy its failure to give reasons. The reference was therefore not capable of, or suitable for, remedying the particular wrong. Judicial review was consequently available despite the general rule that it is a remedy of last resort.
6. The decision did not undermine the statutory scheme. In most challenges to the substance, correctness or rationality of an FSA decision, the Upper Tribunal will provide a suitable alternative remedy. The matter was to be remitted, subject to submissions, to a different Regulatory Decisions Committee for reconsideration.