Ashraf Wealth Management Limited v The Financial Conduct Authority

On a reference from a regulatory refusal of authorisation, the Tribunal must decide whether the regulator’s decision was reasonably open to it. It must not substitute its own decision or conduct a judicial review of the regulator’s process. The Tribunal may consider evidence arising after the decision and evidence not previously before the regulator. A decision may reasonably rest on cumulative concerns about an applicant’s competence, compliance with procedures, advice quality, integrity and transparency. Historic misconduct remains relevant, although subsequent conduct may lessen or purge its impact. Where the regulator’s concerns are sufficient on the evidence, criticism of an individual investigation does not require remittal. The reference must be dismissed if the refusal was within the range of reasonable regulatory responses.

Ashraf Wealth Management Limited referred to the Tribunal the Financial Conduct Authority’s refusal dated 14 March 2023 to authorise it to carry on regulated activities. The Authority was not satisfied that the Applicant would satisfy and continue to satisfy the threshold conditions concerning appropriate resources and suitability under the Financial Services and Markets Act 2000.

The principal concern was Mr Imran Ashraf, the Applicant’s sole proposed adviser and one of its shareholders. His regulatory history included terminations by St James’s Place and Tenet, concerns about compliance with procedures and advice quality, and alleged lack of transparency. The central issue was whether the Authority’s decision was reasonably open to it on the evidence.

1. Reference dismissed. The Tribunal held that the Authority’s refusal of authorisation was a decision reasonably open to it under section 133 of the Financial Services and Markets Act 2000.
2. The reference was not an appeal against the Authority’s decision or a judicial review of its investigative process. The Tribunal’s task was to determine the appropriate action in the circumstances falling within the subject matter of the reference. It could consider subsequent developments and evidence not available to the Authority: [2015] UKUT 0079 (TCC); [2016] UKUT 447 (TCC).
3. The applicable question was whether the Authority’s conclusion that the Applicant would not satisfy the threshold conditions was within the range of reasonable decisions open to it. The Tribunal could dismiss the reference or remit the matter, but could not substitute its own decision: [2019] UKUT 49 (TCC).
4. The evidence disclosed cumulative and continuing concerns. They included failure to follow required procedures, doubtful advice quality, potential client detriment, integrity concerns arising from fabricated documents, and continuing lack of transparency with the Authority. Those matters were relevant to the appropriate resources and suitability threshold conditions. Historic misconduct remained relevant, although later conduct could lessen or purge its impact.
5. The Tenet investigation did not justify the regulatory reference in the form provided. After considering Mr Ashraf’s explanations, the Tribunal found that most criticisms concerning four mortgage clients were not established. A failure to complete required identity checks and obtain supporting bank statements remained, but would not alone have justified the Authority’s decision.
6. That conclusion did not alter the outcome. The other evidence, including the SJP termination, the withdrawal of the defined-benefit licence, pension-switching concerns, poor compliance with procedures and lack of transparency, placed the refusal well within the spectrum of regulatory responses reasonably open to the Authority. The Authority’s initial burden and the subsequent burden on the Applicant were applied in accordance with [2016] UKUT 478 (TCC).

The Applicant referred the Authority’s refusal of authorisation to the Upper Tribunal under section 55Z3(1) of the Financial Services and Markets Act 2000. The Upper Tribunal dismissed the reference.