Get in line: Three-year wait to appeal FCA bans and fines

Senior managers seeking to appeal bans and fines imposed by the Financial Conduct Authority (FCA) are waiting up to three years for a hearing date at the Upper Tribunal. The regulator’s expanding perimeter could mean more cases will be challenged, potentially extending wait times further, lawyers said.

Currently there are 19 individuals awaiting a hearing and only nine of those have received a date, according to the Upper Tribunal website. Jes Staley, Barclays’ former chief executive, is among those waiting, along with former senior managers from Metro Bank and Banque Havilland. Staley, has appealed his £1.3 million fine and ban announced in October 2023, and his hearing is scheduled for March 2025.

According to the Upper Tribunal website, there are around 30 cases seeking to appeal FCA decisions.  

Court backlogs

Backlogs have grown across the entire UK court and tribunal system, caused in part by the Covid-19 pandemic. An ongoing  reform programme that started in 2016 has also contributed to the growing backlog, according to a report from the National Audit Office. The employment tribunal system has a backlog of roughly 40,000 cases, while there are 68,125 outstanding cases in the crown courts and 387,042 in the magistrates’ courts, according to the latest figures.

“The number of cases that go to the High Tribunal are relatively small. The cases are either going to be quite complicated, like BlueCrest or they’re going to be an individual trying to clear themselves. They’re the sorts of people that will go to tribunal and be willing to take the time and spend the money. The biggest problem, I think, is that the FCA’s timescales have been so long,” said Chris Ninan, a partner at Herbert Smith Freehills in London.

The FCA’s most recent enforcement data shows that most regulatory investigations take 24 to 48 months, with a minority (four) taking 60 months or more. Most post-investigation regulatory enforcement operations (24) take more than 60 months, as do most post-investigation criminal enforcement operations (21).

Recently the FCA has reduced the number of cases it opens and has closed more cases without further action. However, it is too soon to know whether that will speed up the enforcement process, Ninan said.

“The last time I looked, it was six to nine months from referring the matter to the [FCA’s] Regulatory Decisions Committee] before getting a meeting. And the received wisdom is the RDC isn’t going to exonerate you, but there could be a reduced sanction. That is a stepping stone on the way to Tribunal if your goal is to go from whatever the FCA have said they want to do to zero,” Ninan said.

Expanding perimeter

As the FCA’s remit grows so does the possibility of challenges at the tribunal. “The vast nature of the FCA’s regulatory perimeter means it’s inevitable that there’s going to be more challenges to its decisions. In a difficult world where there’s already pressure on our court system, it’s unsurprising that there are unfortunately long waits,” said John Bedford, a partner at Dechert in London.

Long waits can have an impact on people’s lives and businesses, lawyers said. Tom Kalaris, the ex-Barclays banker applied to the FCA in September 2020 to be chief executive at Saranac Partners, a firm he founded in 2015. In November 2022, the FCA refused Kalaris’ application saying it was not satisfied he was a fit and proper person to perform control functions.

In December 2022, Saranac referred the decision notice to the Upper Tribunal, which gave its judgment in August 2024 after a two-day hearing held in July. All in, that was four years from application to be a senior management function holder to being turned down by the tribunal.

“It has a serious impact on people’s lives, particularly if you’ve got the FCA now moving towards a process where they have the discretion to name entities and subjects of investigations before they’re even able to respond and before there’s even a case brought,” said Evan Flowers, a partner at Dechert in London.

“That’s going to create, potentially, a time lag of many years before people and institutions are able to clear their name if they’re wrongfully accused. Again, it’s a serious problem, and it’s contrary to basic notions of procedural fairness and how the justice system is normally designed to work,” he added.

The FCA is currently revisiting its proposals to announce that some firms or individuals are subject to enforcement investigations.

“I can see the appeal for regulators, who often spend many thankless years on cases without public recognition. That is a legitimate frustration. But it has to be balanced against the more acute damage that prematurely naming and shaming will cause investigation subjects in cases where ultimately no wrongdoing is proven,” Flowers said.

“It also creates a clear risk of market distortion when a regulator names firms in its crosshairs before it has tested the evidence, potentially granting competitors an unfair advantage. This could unintentionally harm the integrity of markets and ultimately consumers — the very antithesis of the FCA’s basic mission.”

Waiting and waiting

Staley’s near two-year wait is short compared to other individuals and firms waiting for an Upper Tribunal hearing. Craig Donaldson and David Arden, Metro Bank’s former chief executive and chief financial officer respectively, have been waiting since December 2022 to argue against their FCA fines.

The FCA fined them £223,100 and £134,600 respectively for being “knowingly concerned” in breaching the listing rules by publishing incorrect information to investors. Their hearings will take place in April 2025, over two years since receiving their decision notices.

Banque Havilland executives, including its London branch chief executive, were fined and banned by the FCA in May 2023. They have been waiting since February 2023 for a hearing, which will take place in September and October 2025, nearly three years after receiving their decision notices, according to the Upper Tribunal schedule. Another employee has made a third-party reference in the case, on the basis the decision notices “contain statements that are prejudicial to him”.

Other individuals awaiting a hearing date include bond traders fined and banned by the FCA for market abuse, three former Carillion executives, and several individuals banned and fined for giving poor pension transfer advice.