Promethean Finance Limited v The Financial Conduct Authority

In a non-disciplinary reference under Financial Services and Markets Act 2000, the Upper Tribunal must dismiss the reference if the regulator’s decision was reasonably open to it. A remittal is unnecessary where errors in the regulatory decision are not central and the regulator would inevitably reach the same result.

Registering third-party websites as an authorised firm’s trading names may mislead consumers about regulatory status and protections. That risk is especially material where consumers are vulnerable. Guidance does not itself create a breach, but conduct contrary to it may breach statutory and Handbook obligations. Limited insolvency-practitioner exemptions do not exempt unrelated debt-counselling activities or financial promotions.

Promethean Finance Limited, an authorised consumer-credit firm, registered on the Financial Services Register numerous website domain names owned and operated by independent insolvency practitioners. The Financial Conduct Authority considered that these were not genuine trading names of Promethean and that their registration, together with failures in financial promotions, created consumer-protection risks.

By a Second Supervisory Notice, the Authority imposed immediate requirements under Financial Services and Markets Act 2000, including removal of the names, prior approval for future trading names, reviews of promotions and systems, preservation of records, and consumer notifications. Promethean referred that notice to the Upper Tribunal. It challenged the Authority’s conclusions, the applicability of insolvency-practitioner exemptions, the proportionality of the action, and the consumer warning.

The central issue was whether the Authority’s decision and requirements were reasonably open to it in the Tribunal’s supervisory jurisdiction.

1. Reference dismissed. In a non-disciplinary reference, the Tribunal conducts a full rehearing of the relevant issues but has supervisory powers. It must dismiss the reference unless its findings show that the Authority’s decision was not reasonably open to it. If a remittal would inevitably produce the same decision, errors which are not central do not justify remittal.

2. The website domain names were not bona fide trading names used by Promethean. Their registration created a real risk that consumers would believe they were dealing with an FCA-authorised firm and enjoyed the protections associated with one. The risk was heightened because the affected consumers were likely to be vulnerable. This conduct breached section 24 of the Financial Services and Markets Act 2000, Principles 6 and 7 of PRIN, and GEN 4.5.6G, and created a risk of failure to meet the suitability threshold condition in Schedule 6.

3. The Authority’s trading-name guidance did not itself create legal obligations. Its breach could nevertheless result in breaches of statute or regulatory rules. The fact that a website domain name was not a legal entity was irrelevant. Registration did not confer regulated status on the third-party operators, but its practical purpose was to present their websites to Google as connected with an FCA-authorised business.

4. Article 72H of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and article 55B of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 were limited provisions. They did not provide a general exemption for all activities or promotions by insolvency practitioners, and did not apply to the activities in issue.

5. Promethean’s A1P1 rights were not engaged because future earnings dependent on authorisation were not transferable marketable goodwill. In any event, the Authority’s measures were reasonable and proportionate to consumer protection. The statutory process, including the independent Tribunal reference, complied with Article 6.

6. The Authority had acted unfairly in taking nearly four months to respond to Promethean’s December 2022 communication. It was also mistaken about the implication of “.org” domains. Those matters, and the technical although material breaches concerning authorised representatives’ promotions, were not central. The Authority would inevitably make the same decision on remittal.

7. The Tribunal also lacked jurisdiction to direct removal or amendment of the consumer warning. Promethean’s post-hearing application to adduce further evidence was refused as irrelevant.

• Upper Tribunal (Tax and Chancery Chamber): Promethean referred the FCA’s Second Supervisory Notice dated 1 June 2023. The Tribunal dismissed the reference and did not remit the matter to the Authority.