Yesterday my colleague Luke Gittos and I attended the educational event organised by the Young Fraud Lawyers Association (YFLA) held at the Chambers of Simon Russell Flint QC. The event featured Christopher Coltart and Vivienne Tanchel, members of the Chambers of Orlando Pownall QC, discussing the regulatory landscape in the wake of the dissolution of the Financial Services Authority (FSA).
There was a thorough description of the agencies which have taken over the regulatory, civil, and criminal functions formerly carried out by the FSA. In its wake, the Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA), and the Financial Conduct Authority (FCA) now oversee the market in what may prove to be an overlapping and contradictory manner.
Two points stand out starkly.
The first is that the PRA and FCA appear to have been given equal but opposing powers to interfere with each other’s decisions. It appears that if the FCA decide to pursue action against a company, for example, the PRA has power to veto that action where it believes the company may not survive the prosecution. However, the FCA may then ignore that decision to veto its prosecution. The decision (or failure to make a decision) may be judicially reviewable by a savvy defendant, making life much more difficult for one or both agencies and highlighting a potential clash in their stated aims.
The second point is one which experienced defence firms such as this one have been aware of for some time but is worth repeating. Where the FCA decide to pursue a freezing order over a company’s (or individual’s) assets, the temptation may be to resist the order heavily or even apply for its discharge once made. However, if the FCA are also pursuing criminal proceedings, or choose to do so in the alternative, then they will often very easily be able to obtain a restraint order over the same assets in the Crown Court. The restraint order will have the same effect as the freezing order but it will likely be stricter, more difficult to vary, and virtually impossible to discharge until the end of the criminal prosecution. It may in such circumstances accordingly be preferable not to resist the making of a (civil) restraint order with a view to preventing the FCA applying for a (criminal) restraint order.
Hughmans is acting for defendants in the first prosecution brought by the FCA, which involves allegations of multi-million pound misselling and fraud.