Overview
On 3 February 2026, the Upper Tribunal (the Tribunal) handed down its judgment in the appeal by Rangecourt SA (formerly Banque Havilland SA) (the Bank) and two of its former employees, Mr Rowland and Mr Bolelyy against the Decision Notices issued against them by the FCA's Regulatory Decisions Committee (RDC).
Whilst the Tribunal upheld the decision of the RDC on liability, its criticism of and decision to slash the fine imposed by the RDC on the Bank by 60% has increased pressure on the FCA to justify its decision making and provide greater transparency on the penalties it imposes.
Background to the FCA Investigation
In 2017, in response to a request (deemed to be lawful by the FCA and, subsequently, the Tribunal) from, Mubadala Investment Company (Mubadala) (a sovereign wealth fund), the Bank prepared a presentation on how "currency peg pressure" might be put on the Qatari Riyal whilst still protecting the value of Qatari bonds held by UAE banks.
The Bank's original presentation in response to Mubadala's brief was not considered to be improper until it "mutated" at around the time of a meeting in September 2017 between the Bank's former employees, Mr Rowland, Mr Weller and Mr Bolelyy (the Former Employees).
It was at the September 2017 meeting that the Former Employees devised a strategy to harm and devalue the Qatari Riyal through manipulative trading practices with a view to breaking the peg between the Qatari Riyal and the US Dollar, at a time when states in the Middle East, including the UAE, were levying sanctions on Qatar (the Strategy).
Mr Rowland held the position of CEO of the Bank's UK branch. Mr Weller was the Head of Asset Management of the UK Branch. Mr Bolelyy was referred to as an administrative assistant to Mr Rowland although the judgment refers to his email signature listing his role as a "senior investment analyst".
The FCA Decision
Following the Strategy having been leaked to the press in October 2017, the Bank self-reported the matter to the FCA and commissioned an independent investigation.
On 14 October 2021, the FCA issued Warning Notices against the Bank and the Former Employees.
It was undisputed between all parties that the Strategy was improper and the RDC ultimately determined that the Bank and the Former Employees breached FCA Principle 1 and Individual Conduct Rule 1 which require regulated firms and senior managers respectively to act with integrity. Pursuant to PRIN 3.2.1A of the FCA Handbook, the obligation on firms to act with integrity relates to the carrying on of regulated business and ancillary activities.
Finding that there were no mitigating factors, on 17 January 2023, the RDC determined that the Bank should be penalised with a fine of £10 million under section 206 FSMA with each of the Former Employees to be banned from working in financial services in the future under section 56 FSMA and fined in the amounts of £352,000 (Mr Rowland), £54,000 (Mr Weller) and £14,200 (Mr Bolelyy).
The Appeal to the Tribunal
Dissatisfied with the RDC's decision, the Bank and Mr Rowland and Mr Bolelyy (the Appealing Former Employees) referred the Decision Notices against them to the Tribunal for a full re-hearing. Mr Weller reached a settlement with the FCA and did not appeal.
The Bank's case on liability primarily focused on it distancing itself from the conduct of the Former Employees and denying that the Strategy amounted to the carrying on of regulated activities or ancillary activities.
Four principal questions were central to the Tribunal's determination of the case against the Bank. Firstly, whether the Strategy was "Bank business" and, if so, whether the Appealing Former Employees' conduct could be attributed to the Bank for the purposes of Principle 1 (conducting business with integrity). Secondly, whether the Strategy constituted the carrying out of regulated activities or ancillary activities. Thirdly, whether the FCA was entitled to find the Bank and the Appealing Former Employees lacked integrity in breach of Principle 1 and Individual Conduct Rule 1. Finally, if liable, what was the appropriate penalty.
The Tribunal's decision
Was the Strategy Bank Business?
On the first question, the Strategy was adjudged to be "Bank business" as, regardless of any other intentions, the purpose of the Strategy was to further the interests of the Bank. The Tribunal referred to communications in which Mr Rowland had referred to using the leak of the Strategy to the press as a "badge of honour" and capitalising on it to establish an image of the Bank being associated with the interests of the UAE. Moreover, the Former Employees worked on the strategy in the course of their employment, and giving or contributing to financial advice in these circumstances fell within the roles and responsibilities as set out in their contracts of employment, and the fact that the Strategy was unlawful did not take the conduct outside the scope of their employment.
The Tribunal additionally found that, for the purpose of attribution in the context of Principle 1, there was no requirement on the FCA to prove the Former Employees were the Bank's "directing mind and will" (the test for attribution traditionally deployed by the courts). Indeed, "the obligation under Principle 1 is not merely to conduct with integrity that part of the firm's business of which the directing mind had knowledge. It is to conduct all of the firm's business with integrity". The Tribunal considered that, although the Strategy did not pass through internal approval procedures, such as the Bank's centralised Risk and Compliance functions, and did not contain any Bank branding, the Bank should nevertheless be held accountable for its employees' misconduct regardless of whether they acted without senior authority or approval.
Did the Strategy constitute the carrying out of regulated activities or ancillary activities?
On the second question, unlike the FCA, the Tribunal was not satisfied that the Strategy was ever disseminated to Mubadala. The Strategy was not considered to be a regulated activity pursuant to Articles 25 (arranging deals in investments) or 53 (advising on investments) of FSMA. The Tribunal nevertheless determined that the Strategy fell within the purview of Principle 1 because it constituted an "ancillary activity" in connection with the Bank's regulated activities.
Was there a breach of Principle 1?
The Bank had admitted breaches of Principle 2 and Principle 3. However, there was a dispute as to whether there had been a breach of Principle 1. Finding against the Bank and the Appealing Employees, the Tribunal upheld the RDC decision on liability, determining that Principle 1 and Individual Conduct Rule 1 had been breached.
Was the level of the fine appropriate?
The Tribunal agreed with the RDC's analysis of the seriousness of the breach (level 5, reserved for the most serious breaches). The Strategy was referred to in the Judgment as being deliberate, intending to destabilise the economy of a sovereign state and encouraging financial crime.
However, on the fourth question on the appropriate penalty against the Bank, there was a gulf in approach between the RDC and Tribunal. The Tribunal described the FCA fine as "arbitrary" and lacking any clear reasoning by reference to similar RDC decisions.
Further, the Tribunal considered the RDC had erred in determining that there were no mitigating circumstances. It found that the penalty on the Bank should be lowered as a result of its finding that there was no lack of integrity at a systemic or organisational level; the Strategy not having been shared externally or implemented; and, most significantly, the Bank's cooperation since self-reporting the breach.
In consideration of the above factors, the Tribunal held that the Bank's fine should be slashed by 60% from £10 million to £4 million. Whilst it adopted a different analysis in respect of the fine against Mr Rowland, the Tribunal did not consider it appropriate to depart from the RDC penalties against the Appealing Former Employees.
Comment
There are three significant points arising out of the Judgment:
Firms' potential increased liability for the actions (including informal) of its employees:
Historically, businesses have often avoided liability where a breach of the FCA's rules is the result of the misconduct of employees deemed to be "on a frolic of their own", as opposed to actions taken by or approved by its senior management. Although the Tribunal held that the conduct of Mr Bolelyy (the most junior of the Former Employees) could not be attributed to the Bank, the Tribunal's decision that the Bank was liable for the actions of Mr Rowland and Mr Weller regardless of them having acted without senior authority or approval, is significant.
Going forward, it is unlikely that financial service firms will be able to avoid liability simply by seeking to excuse the misconduct of their employees as informal or unsupervised (except perhaps in the case of very junior employees acting independently).
Despite no finding that it had been disseminated or implemented, in light of the Strategy constituting an "ancillary activity", the scope of financial service firms' potential liability going forward may also extend to preliminary, exploratory and more informal conduct. The decision also serves as a reminder that firms can be heavily penalised regardless of whether any harm is in fact caused by a breach of the rules.
Calls for greater transparency:
Although the FCA will be relieved that the Tribunal upheld its decision, the Tribunal's criticism of the RDC fine against the Bank as "arbitrary" and decision to reduce it by 60% has brought the FCA's decision making firmly into the spotlight, in particular how mitigating factors should be applied and penalties calculated.
Impact on appeals:
Firms have, to date, been deterred from appealing decisions at first instance because of the high costs involved and the risk of losing the 30% permitted discount offered by the FCA where a fine is settled early. However, the potential loss of the 30% discount can be mitigated by firms accepting liability and appealing only on the penalty. In light of the Judgment, that may be an approach increasingly adopted by firms.