Saranac Partners Limited v The Financial Conduct Authority

On a statutory reference concerning approval of a controlled-function candidate, the Upper Tribunal must dismiss the reference if the regulator’s decision was reasonably open to it. It must remit only where its findings show that the decision was not reasonably open, unless the regulator would inevitably reach the same result on remittal.

Dishonesty is determined by first finding the individual’s actual knowledge or belief and then applying the objective standards of ordinary decent people. A candidate’s deliberate dishonesty and lack of candour in compelled regulatory interviews may reasonably lead the regulator to be unsatisfied as to honesty and integrity, and therefore fitness and propriety.

Saranac Partners Limited applied for approval under Financial Services and Markets Act 2000 section 60 for its founder, Mr Kalaris, to perform Chief Executive and Executive Director controlled functions. The Financial Conduct Authority refused the application because it was not satisfied that he was fit and proper, relying on answers given in regulatory interviews in 2013 and 2014.

Saranac referred the Decision Notice to the Upper Tribunal. The central issues were whether Mr Kalaris had lacked candour or acted dishonestly in those interviews, the fair use of findings made in other proceedings and evidence from unavailable witnesses, and whether later evidence required remittal despite any flaws in the Authority’s reasoning.

1. The Tribunal unanimously dismissed the reference. Under Financial Services and Markets Act 2000 section 133, its role was supervisory. It had to dismiss the reference if the Authority’s decision was reasonably open to it, but remit if its findings showed otherwise, subject to the inevitable-outcome principle.

2. The Tribunal could admit earlier judicial findings and other material under Rule 15(2) of the Tribunal Procedure (Upper Tribunal) Rules 2008. Admissibility did not determine weight. Although the findings in Andrew Tinney v FCA [2018] UKUT 0435 (TCC) were admissible, it was unfair to place weight on them because Mr Tinney was not a witness and could not be cross-examined. The Tribunal adopted the same fairness-based approach to other untested evidence, except where Mr Kalaris accepted it.

3. On the 2013 interview, the Tribunal found that Mr Kalaris knew that the advisory services agreement and the Qatari capital investment formed a connected package. The agreement filled the gap between the commission approved by Barclays and the total value required by the Qataris. His answers concerning the agreement’s genesis, purpose and calculation were misleading or incomplete and lacked candour. His unqualified denial of any connection was dishonest.

4. Applying Ivey v Genting Casinos UK Ltd [2017] UKSC 67, the Tribunal found that Mr Kalaris knew the true position and that ordinary decent people would regard his answer as dishonest. It also found that he knew of the existence of the GenVen Report before the meeting at which he was shown a copy, so his contrary answer in the 2014 interview was knowingly false and dishonest.

5. The Tribunal considered favourable later evidence, including compliance with restrictions and observations by two non-executive directors about Mr Kalaris’s conduct at Saranac. Those matters were substantially outweighed by the findings of dishonesty and lack of candour, compounded by his continued failure to accept wrongdoing. Even if remitted, the Authority would inevitably remain unsatisfied that he was fit and proper. The reference was therefore dismissed.

• Upper Tribunal (Tax and Chancery Chamber): Saranac referred the Financial Conduct Authority’s refusal of an approval application under Financial Services and Markets Act 2000 section 60. The Tribunal dismissed the reference.
• Financial Conduct Authority: By a Decision Notice dated 17 November 2022, the Authority refused approval because it was not satisfied that Mr Kalaris was fit and proper to perform the proposed functions.