CIT, R (on the application of) v The Financial Conduct Authority (No.1)

A regulator applying guidance on publicity during investigations must interpret the guidance correctly, but the evaluative application of that guidance remains primarily for the regulator. Where guidance distinguishes between no announcement, an anonymised announcement and a naming announcement, the decision-maker must assess the latter against both alternatives. Exceptionality must be judged against the investigation cohort and must involve reasons relevant to naming. A composite assessment may be lawful without a sequenced route to verdict, provided the reasons read fairly as a whole show that the correct approach was adopted. The court will not substitute its own regulatory judgment unless the outcome falls outside the range of reasonable decisions or the reasoning contains a demonstrable flaw.

The claimant, an anonymised company regulated by the Financial Conduct Authority, challenged the FCA’s decision to publish the fact of an investigation and identify the claimant as its subject. The challenge alleged misinterpretation of the FCA Enforcement Guide and unreasonableness in the decision’s outcome and reasoning process.

The matter was converted from a permission and interim-relief hearing into a rolled-up substantive hearing. Fordham J granted permission on all grounds but dismissed the claim on its merits. The central issues were the proper interpretation of the Guide’s exceptional-circumstances test and whether the FCA’s decision to make a naming announcement was reasonable.

1. Disposition. Permission for judicial review was granted on every ground, but the substantive claim was dismissed. The claimant was ordered to pay £32,000 in costs. Permission to appeal was refused.
2. Interpretation. The Guide created three essential options: no announcement, an anonymised announcement and a naming announcement. A naming announcement had to be judged against both alternatives. Exceptionality had to be assessed relative to investigated situations, not merely regulated situations, and had to involve reasons relevant to naming rather than reasons supporting publication alone.
3. Division of responsibility. The court determined the objectively correct interpretation of the Guide. Questions of exceptionality, desirability, potential prejudice and the appropriate regulatory response were evaluative matters for the FCA as primary decision-maker, subject to conventional judicial review for unreasonableness.
4. Application. The Second Memorandum did not materially misinterpret the Guide. Its reasoning was composite rather than divided into separate stages, but a sequenced route to verdict was not legally required. The document had to be read fairly and as a whole.
5. Key theme. The FCA reasonably concluded that naming the claimant was the most effective way to alert its customers promptly and specifically, whereas an anonymised or claimant-generated communication would leave them insufficiently informed. The public-interest objectives were reasonably judged to outweigh the potential prejudice to the claimant.
6. The court accepted that parts of the reasoning could be criticised, particularly when viewed solely against an anonymised announcement. Those weaknesses concerned regulatory merits and did not amount to a demonstrable flaw in the reasoning process or render the outcome unreasonable. The FCA’s undertaking prevented publication of the naming announcement pending the relevant appeal period or Court of Appeal decision.

This was a first-instance judicial review. The court granted permission, dismissed the substantive claim, refused permission to appeal, and abridged the period for seeking permission to appeal from the Court of Appeal to seven days.