Banque Havilland SA & Ors v The Financial Conduct Authority

Where a third party refers prejudicial reasons in a Decision Notice under section 393(9) of the Financial Services and Markets Act 2000, that reference is a reference of the relevant “matter” for the purposes of section 390. The regulator must therefore await determination of the third party reference before issuing a Final Notice to the subject of the Decision Notice, whether or not the subject has himself referred the matter.

The Tribunal’s jurisdiction does not extend to quashing a Final Notice or determining whether it was lawfully issued. A Final Notice is not a judicial decision and does not bind a third party’s reference.

Banque Havilland SA, Edmund Lloyd Rowland and Vladimir Bolelyy referred their Decision Notices to the Tribunal. David John Rowland made a third-party reference under section 393(9) in respect of prejudicial statements in Decision Notices issued to several persons. Mr Weller, whose Decision Notice contained statements concerning Mr David Rowland, did not refer his Decision Notice.

The FCA issued Mr Weller with a Final Notice before the third-party reference was determined. The preliminary issues were whether that Final Notice affected the Tribunal’s jurisdiction and whether section 390 permitted its issue before determination of the third-party reference.

1. Jurisdiction. The issue of a Final Notice did not pre-determine or undermine Mr David Rowland’s reference. A Final Notice is not a judicial decision and does not bind a third party: Carrimjee v FCA [2015] UKUT 0079. The Tribunal had jurisdiction to determine the third-party reference, but no jurisdiction under the statutory scheme to quash a Final Notice, grant an injunction against its issue, or review its lawfulness. Those matters would fall to the Administrative Court.
2. Construction of section 390. The words “the matter was not referred” in section 390(1) are capable of bearing either construction in isolation. Read with section 393(9), the statutory scheme, and the broad meaning of “matter”, they include a reference by a third party of the prejudicial reasons on which the Decision Notice is based. The “matter” embraces the allegations, circumstances, evidence and facts underlying the notice. The approach was consistent with Jabre v FSA FIN 2006/0006, FCA v Hobbs [2013] Bus LR 1290, and Markou v FCA [2023] UKUT 00101 (TCC).
3. Section 390 is exhaustive as to the procedural consequences of a Decision Notice and a subsequent reference. Parliament had not confined sections 390(1) and (2) to references by the subject of the Decision Notice. The possibility that a third-party reference may delay regulatory finality was a consequence of the statutory third-party rights scheme.
4. Accordingly, the FCA was not entitled to issue a Final Notice to Mr Weller until the third-party reference relating to his Decision Notice had been determined. The references could nevertheless proceed to a hearing.

This was a preliminary issue in proceedings before the Upper Tribunal. The judgment discussed, but did not appeal from, earlier Tribunal decisions including One Insurance Limited v FCA [2017] UKUT 0210 (TCC) and Carrimjee v FCA [2015] UKUT 0079.