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Upper Tribunal considers impact of third party rights on issue of Final Notices

Posted on 22 September 2023


On 5 May 2023, the Financial Conduct Authority ('FCA') issued Decision Notices to Banque Havilland, Edmund Rowland, Vladimir Bolelyy and David Weller. The FCA found that they acted without integrity by creating and disseminating a document which contained manipulative trading strategies aimed at creating a false or misleading impression as to the market in, or the price of, Qatari bonds. One of the individuals, David Weller, accepted the findings in the Decision Notice and on 6 March 2023, the FCA issued Mr Weller with a Final Notice. The other parties referred their Decision Notices to the Upper Tribunal, though those references are yet to be heard.  

All four Decision Notices (including Mr Weller's) refer to the conduct of a third party, David Rowland, the ultimate controller of Banque Havilland. Mr Rowland exercised his statutory right as a third party and referred all four Decision Notices to the Tribunal on the basis that they identify him and contain information that is prejudicial to him.    

On 14 June 2023, the Tribunal published its decision in respect of a preliminary issue, raised by Mr Rowland, concerning the timing and issue of the Final Notice to Mr Weller in circumstances where Mr Rowland's third party reference was pending. Mr Rowland claimed that because the Tribunal’s decision on the various references (including his own third party reference) may be inconsistent with Mr Weller's Final Notice, a Final Notice could not properly be issued to Mr Weller or published prior to the Tribunal determining his reference in relation to Mr Weller’s Decision Notice. Mr Rowland also argued that by issuing the Final Notice, the FCA had pre-determined the Tribunal's assessment of his third party reference, therefore circumventing the Tribunal's statutory role. Mr Rowland asked the Tribunal to quash the Final Notice or, if it had no such power, to request that the FCA rescind the Final Notice.  

The FCA argued that section 390 FSMA (which sets out the circumstances in which the FCA can issue a Final Notice) gives the FCA the right to issue a Final Notice when it has issued a Decision Notice and the subject has not made a reference to the Tribunal, whether or not a third party has made a third party reference under FSMA.   

The Tribunal's Decision  

The Tribunal concluded that:  

  • The fact that the FCA had issued a Final Notice to Mr Weller did not impact the Tribunal's jurisdiction to consider Mr Rowland's third party reference of Mr Weller's Decision Notice.  This was, in part, because the FCA had said that, if Mr Weller's Final Notice were to be published, it would include an endorsement to make it clear that a reference had been made to the Tribunal and that the FCA's findings had not been considered judicially. As a result, it could not be said that the issue of the Final Notice had pre-determined the Tribunal's assessment of Mr Rowland's third party reference. 
  • A third party reference is made in relation to a Warning Notice or Decision Notice, not a Final Notice. Although it is usual practice for the FCA to set out in detail the reasons for its regulatory action in a Final Notice, there is no legal requirement that it should do so. This reinforced the Tribunal's view that the focus should be on what is said about a third party in the Decision Notice and not the Final Notice.  
  • The Tribunal did not need to determine whether the FCA acted lawfully in issuing the Final Notice prior to Mr Rowland's reference being determined. However, even if it did take the view that it was not lawful for it to have done so, the Tribunal has no jurisdiction under FSMA to quash a Final Notice or issue an injunction to prevent the FCA from issuing a Final Notice.   

Although it determined that it had no jurisdiction in respect of Final Notices, the Tribunal decided to express a view after being "urged" by the parties to do so. In doing so, the Tribunal came to the view that FSMA does not envisage the issue of a Final Notice until the Tribunal has determined any third party reference in respect of the underlying Decision Notice. This is the case regardless of whether the subject of the Decision Notice has referred the matter to the Tribunal. Their reasons for this view included:  

  • Pursuant to section 390(1) FSMA, the FCA must issue a Final Notice if it has given a person a Decision Notice and "the matter" was not referred to the Tribunal.   
  • "The matter" includes any third party reference to the Tribunal.   
  • If Parliament had intended section 390(1) FSMA to be concerned only where the person given a Decision Notice refers it to the Tribunal then Parliament would have said so. The Tribunal commented on the implications of this view:    

"It means that, in practice, a reference made by a third party given a copy of a Decision Notice may delay (or even stop) the issuance of a Final Notice, but there is nothing problematic about that – Parliament has decided that third parties should be afforded the right to make references to the Tribunal and, consistent with that, finality, in Final Notices, should only be possible once the reference is complete.

The Tribunal acknowledged that the FCA made strong arguments regarding the public policy aspects of publishing a Final Notice where the Decision Notice has not been referred by the subject of it, including that delaying the issue of a Final Notice impacts the subject and fetters the FCA's statutory objective to protect consumers. Nevertheless, the Tribunal concluded that it could only interpret the law, not what the law ought to be as a matter of policy.     


So, where do things stand now? Although it has come to a view on something it does not have the power to enforce, the Tribunal's comments could cause meaningful delay to the issue of Final Notices where related third party references to the Tribunal are afoot. The Tribunal has suggested that the FCA considers lobbying parliament for the law to be clarified or to have the matter tested in the Administrative Court. As matters stand, Mr Weller's Final Notice remains in place, though not yet published, and we will need to wait and see whether the FCA takes the Tribunal's advice on clarifying this issue, something they may be inclined to do if it may impact future enforcement outcomes.  

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