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FCA proposes to take enforcement action against an individual relating to "non-financial misconduct"

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Hitchins Sarah
Sarah Hitchins

Partner

London

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Tom Marsh

Associate

London

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27 April 2021

The UK Financial Conduct Authority (the FCA) is proposing to take enforcement action against an individual, Jon Frensham, relating to "non-financial misconduct".

The FCA has made clear its commitment to tackling non-financial misconduct in the financial services industry and this case is the fourth relating to non-financial misconduct that the FCA has publicised since November 2020. All four cases have focused on the impact that conduct outside of the workplace (namely convictions for serious criminal offences) have on individuals’ fitness and propriety and, specifically, their integrity and reputation.

Unlike the three cases that came before it, this case was considered by the FCA's Regulatory Decisions Committee (the RDC). Accordingly, we have a much more detailed insight into how the FCA approached and reached its proposed decision that Mr Frensham is not fit and proper, as well as how the RDC responded to various points that Mr Frensham argued in his defence. These points also provide regulated firms with important guidance as to how the FCA expects them to assess the potential regulatory consequences of non-financial misconduct committed by their employees.

For an analysis of the key points that firms should take into account from the FCA's proposed enforcement action, please download the full report, below.

Mr Frensham has referred the decision notice to the Upper Tribunal where he and the FCA will each present their cases. The Upper Tribunal will determine what, if any, is the appropriate action for the FCA to take, and will remit the matter to the FCA with such direction as it considers appropriate for giving effect to its determination. As a result, the action outlined in the decision notice is provisional and will have no effect pending the determination of the case by the Tribunal. At this stage, the facts and matters stated in the FCA's decision notice therefore reflect the FCA’s view as to how Mr Frensham’s behaviour should be characterised.

When it is handed down, the Upper Tribunal's judgment in this case will shape the FCA’s future approach to taking enforcement action against individuals in relation to non-financial misconduct, and specifically non-financial misconduct that occurs outside of the workplace in employees' private lives. The Upper Tribunal’s judgment is also likely to be instructive for regulated firms in terms of the factors they should consider when assessing the potential regulatory impact of non-financial misconduct that comes to their attention. In particular, we anticipate the Tribunal will explore in more detail the meaning of “integrity” and “reputation” in the context of non-financial misconduct for the purposes of fitness and propriety standards.

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