The Financial Conduct Authority v Neville Registrars Ltd

For the purposes of Financial Services and Markets Act 2000, s 177(1), an investigating authority may certify a failure to comply with an information requirement imposed by an investigator appointed to act on its behalf. The statutory phrase referring to the person imposing the requirement can include the authority acting through its investigator. It was unnecessary to decide whether the investigator could also certify. Information-gathering powers under Part XI do not generally require the authority to meet the recipient’s expenses. The burden imposed must nevertheless remain proportionate under the regulatory principles in s 3B(1)(b), and the exercise of Part XI powers remains subject to public law constraints.

The Financial Conduct Authority applied under Financial Services and Markets Act 2000, s 177, alleging that Neville Registrars Ltd had failed to comply with information requirements issued during an investigation. The requirements were made by investigators appointed by the FCA under s 168. The FCA issued the certificate and the underlying dispute was resolved, leaving only the question of costs.

Neville argued that s 177(1) required the investigator who imposed the requirement to certify the failure personally. It also argued that the information requirement was disproportionate and challenged the amount of costs claimed. The court therefore considered the proper construction of s 177(1), the effect of the investigator acting on the FCA’s behalf, and the proportionality of the information-gathering burden.

1. Certificate under s 177(1). The statutory context supported construing “the person imposing the requirement” as including either the investigator or the FCA. An investigator appointed under s 168 conducts the investigation on behalf of the investigating authority. Accordingly, the FCA could certify that Neville had failed to comply with a requirement imposed by an investigator acting on its behalf.
2. The court did not decide whether an investigator appointed under s 168 could also give a certificate under s 177(1). Given the formality of the certificate and the serious consequences of the resulting court procedure, it might be desirable for the FCA itself to certify and bring the matter before the court. If the investigator had been required to certify, the investigator had not done so in the required form or expressed a personal view that Neville had failed to comply.
3. Expenses and proportionality. The statutory powers to require information under Part XI did not require the FCA to reimburse the recipient’s expenses. Although s 173 did not expressly state that a requirement had to be reasonable, the regulatory principle in Financial Services and Markets Act 2000, s 3B(1)(b), required burdens imposed on a person to be proportionate to the expected benefits. The court was not satisfied that the burden was disproportionate or otherwise unreasonable, having regard also to the constraints on Part XI powers discussed in R (Amro International SA) v Financial Services Authority [2010] Bus LR 1541.
4. The FCA’s costs of £1,840, including leading counsel’s work, service of the application and the court fee, were reasonable. Neville was ordered to pay the FCA’s costs summarily assessed in that sum.