Laura WilesFollowing an Upper Tribunal decision in June 2023 which upheld an application by BlueCrest Capital Management (UK) LLP to summarily strike out a redress requirement imposed by the FCA for its purported breaches of Principle 8, the Court of Appeal has upheld the FCA’s appeal regarding its power to require redress from firms.
In December 2021, the FCA published a decision notice against BlueCrest in which it announced plans to fine the investment manager in relation to conflicts of interest failings, and impose a redress requirement on the firm. BlueCrest referred the case to the Tribunal, which heavily criticised the FCA’s apparent misunderstandings of the structure of BlueCrest’s funds.
The Tribunal found that the FCA’s power to impose a single firm redress scheme under section 55L of FSMA was, in fact constrained by the terms of sections 404 and 404F(7) of the same, which the Tribunal argued required the FCA to establish the four elements of loss, causation, duty and actionability in coming to a decision regarding a redress scheme. It found that the FCA had not meet the actionability threshold. The Tribunal determined that read together, the provisions required that any single firm redress scheme must correspond to a collective one imposed under section 404 of FSMA. As this was not the case, BlueCrest’s strike out application succeeded.
The FCA subsequently made a successful appeal to the Court of Appeal. The Court of Appeal judgment is not yet publicly available, but will have important implications on the FCA’s ability to implement redress requirements. The judgment comes at an early stage in the Tribunal proceedings, and subject to further appeal, the matter will now proceed to a full hearing, where the issue of whether the FCA’s proposed redress scheme should go ahead will be determined.