Darren Antony Reynolds v The Financial Conduct Authority

On an application to amend a reference, permission should be given only where the proposed enlargement has a real prospect of producing a different and improved outcome. This follows from the overriding objective, which requires proportionate case management and avoids hearings of issues incapable of affecting the result.

An unrepresented party’s lack of precision may justify some accommodation, particularly where serious allegations are made, but it does not permit amendment of challenges with no reasonable prospect of success or no material consequence. A challenge may be admitted where it could affect the quantum of a financial penalty, even though other unanswerable findings remain sufficient to support a prohibition.

The applicant applied for permission to further amend his reference against the Financial Conduct Authority’s Decision Notice. He sought to challenge findings that he had acted dishonestly or recklessly and lacked integrity, and the resulting prohibition and financial penalty.

The Tribunal had previously allowed him to make a further amendment application. The applicant, acting without legal representation, relied on evidence which he said could be obtained from third parties and would answer the allegations. The Authority submitted that his proposed case was insufficiently specific and that several challenges had no real prospect of success.

The central issue was whether the proposed amendments had a real prospect of producing a different and improved outcome in respect of the prohibition or penalty.

1. The application was allowed in part. The applicant was permitted to amend the reference to challenge findings of dishonesty, recklessness and lack of integrity under Statement of Principle 1 in relation to allegations concerning unsuitable British Steel Pension Scheme advice, allegedly false suitability reports and non-disclosure of exit fees. The amendment also extended to the penalty only insofar as its quantum was affected by those allegations.

2. Under Rule 5 and the overriding objective in Rule 2 of the Tribunal Procedure (Upper Tribunal) Rules 2008, an enlargement of a reference should be permitted only if it has a real prospect of leading to a different and improved outcome. Otherwise, it would cause avoidable delay and cost without proper consideration of an issue capable of altering the result.

3. The Tribunal proceeded on the favourable assumption that the evidence identified by the unrepresented applicant existed, could be produced, and would establish what he said. His lack of legal representation and incomplete precision warranted some allowance at the amendment stage, although he would need to particularise his case for the substantive hearing.

4. Following Bluecrest Capital Management (UK) LLP v FCA, [2023] UKUT 133 (TCC), the Tribunal treated only Statement of Principle 1 as presently in issue. It would not speculate on a possible change following the Court of Appeal proceedings; the Authority could seek an amendment later if necessary.

5. The proposed challenges to the P6 application-form allegations and to misleading the Authority and Insolvency Service had no real prospect of success. The P6 allegation alone was capable of amounting to a Statement of Principle 1 breach sufficient to place a full prohibition within the range of reasonable regulatory outcomes. Permission to extend the reference concerning the prohibition was therefore refused.

6. By contrast, successful challenges to the pension-transfer, suitability-report and exit-fee allegations could materially reduce the penalty because its calculation appeared to begin with benefits derived from particular breaches. Detailed consequential directions were made, including replacement pleadings, disclosure and a future case-management hearing.

• Upper Tribunal (Tax and Chancery Chamber): Earlier decisions in this reference permitted the applicant to seek a further amendment and defined an existing challenge to the breadth of the prohibition order. This decision determined that further amendment application in part.