In the case of Burdett v The Financial Conduct Authority [2024] UKUT 00156 (TCC), the Upper Tribunal considered whether to allow the Financial Conduct Authority to make amendments to its statement of case to include an alternative allegation which did not form part of its earlier warning notices. The Tribunal applied a narrow test in relation to permitting amendments.

The case arose in the context of two FCA decision notices, which considered that two individuals acted without integrity in relation to pensions business.  This ruling was a preliminary ruling on several issues. 

The first concerned privacy – each applicant asked that there be no publication of the Decision Notice relating to him pending the outcome of the substantive hearing of his reference; and a direction under paragraph 3 of Schedule 3 to the Tribunal Procedure (Upper Tribunal) Rules 2008 that the register is not to include particulars of his reference. 

The FCA also made two applications:

• permission under rule 5(3)(c) of the Rules to amend its statement of case in relation to each reference – it wanted to introduce an alternative allegation that the individuals had failed to act with due skill, care and diligence if they were not found to lack integrity; and
• for a direction under rule 5(3)(b) of the Rules that the two references be case managed and heard together by the Tribunal. Finally, the hearing considered proposed directions for the future management of the references until the substantive hearing.

The Tribunal refused the applications concerning privacy.

It also refused permission for the FCA to amend its statements of case to include alternative allegations of lack of due skill and care, because there was no jurisdiction for the tribunal to entertain the FCA's alternative allegation, as it was not set out in the warning notice, unless it was of the same nature and based on the same facts as the allegations that were in the notice.

It did give permission to renew that application after the Court of Appeal's judgment in Bluecrest has been handed down, which should give more clarity to the issue. The Tribunal also gave the FCA permission to make other amendments to its statements of case.  It also directed that the two references should be case managed and heard together.

The judge highlighted that there is a public interest in getting to the “right” regulatory outcome, in particular ensuring, so far as possible, that persons who are not fit and proper persons to perform functions in relation to a regulated activity are precluded from doing so. On the other hand, Parliament has established a process for resolving disputes between a subject of enforcement action and the FCA, which is based on through, fair and effective administrative decision-making procedures, which are less formal, less expensive and quicker than tribunal or court proceedings. These involve a process of investigation, followed by warning and decision notices. 

A balance needs to be struck between regulatory scrutiny and fairness for those accused of wrongdoing. The Court of Appeal will grapple with these issues when it hears the appeal to the judgment from BlueCrest Capital Management (UK) LLP v The Financial Conduct Authority [2023] UKUT 00140 (TCC). The judgment in that case will be keenly awaited, especially as it also considers the rights of the FCA to impose consumer redress schemes.