In a landmark decision, the Court of Appeal has affirmed the Financial Conduct Authority’s authority to demand redress from firms, as seen in the case of Financial Conduct Authority v BlueCrest Capital Management (UK) LLP EWCA Civ 112.
Back in December 2021, the FCA announced its intention to fine BlueCrest for conflicts of interest and required the firm to pay redress to its clients. BlueCrest challenged this, taking the case to the Upper Tribunal, which initially ruled that the FCA lacked the power to enforce such redress. The Tribunal also declined to consider new allegations the FCA introduced in response to BlueCrest’s defence.
However, the FCA’s appeal against this decision has now been upheld, marking a significant victory. This ruling not only strengthens the FCA’s ability to secure redress for consumers but also enhances its litigation capabilities before the Upper Tribunal. The judgment delved into the Upper Tribunal’s jurisdiction in financial services cases and the FCA’s power to impose redress requirements. The Court of Appeal allowed the FCA’s appeal and dismissed BlueCrest’s cross-appeal.
In reviewing the FCA’s amendment application, the Court clarified that the scope of “the matter” referred to the Upper Tribunal includes those with “a real and significant connection with the subject matter of the process, in the sense of its procedural or substantive content, which has culminated in the decision notice or supervisory notice”. This meant the Upper Tribunal had erred in ruling that it lacked jurisdiction to permit the relevant amendments.
On the issue of redress, the Court concluded that Section 55L of the Financial Services and Markets Act grants the FCA the power to impose a single firm redress scheme, outlining the express conditions for exercising this power. The Court rejected BlueCrest’s arguments, which the Upper Tribunal had previously accepted, that would have imposed additional statutory preconditions such as establishing loss, breach of duty, causation, and civil actionability.
The Court of Appeal’s decision, made at an early stage of the Tribunal proceedings, means the case will now proceed to a full hearing, pending any further appeals. The ultimate decision on whether the FCA’s proposed redress scheme will proceed will be decided at this full trial.
the FCA is entitled in an appropriate case to impose redress for loss of a kind which is not recoverable in the courts
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