Bluecrest Capital Management (UK) LLP v The Financial Conduct Authority
[2023] UKUT 140 (TCC)
The Financial Conduct Authority v BlueCrest Capital Management
2 October 2024
[2024] EWCA Civ 1125
Court of Appeal
The FCA can make a company pay back money to customers even if it doesn't prove the company broke specific rules, as long as it helps protect customers. A court also said the FCA can add new reasons for its case later, as long as it's fair to the company.
Key Facts
- •The Financial Conduct Authority (FCA) issued two notices to Bluecrest Capital Management (UK) LLP (BCMUK): a supervisory notice imposing a redress requirement (FSN) and a decision notice imposing a financial penalty (DN).
- •Both notices were based on BCMUK's alleged failure to manage a conflict of interest between two funds (Internal and External).
- •BCMUK referred the notices to the Upper Tribunal (UT), which ruled that the FCA lacked the power to impose the redress requirement and limited the FCA's ability to amend its case.
- •The FCA appealed the UT's decision, while BCMUK cross-appealed.
- •The FCA's case rested solely on an alleged breach of Principle 8 (Conflicts of Interest), while the proposed amendments introduced allegations of breaches of Principle 7 (Communications with clients) and COBS 4.2.1 (fair, clear, and not misleading communications).
Legal Principles
Statutory interpretation involves an objective assessment of the meaning a reasonable legislature would convey.
R (O) v Secretary of State for the Home Department [2022] UKSC 3; Potter v Canada Square Operations Ltd [2023] UKSC 41
Public law principles apply to the exercise of statutory powers, including rationality and proper purpose.
Case law discussed throughout the judgment
Article 1 Protocol 1 of the European Convention on Human Rights (A1P1) protects property rights, subject to public interest, conditions provided by law, and proportionality.
Case law discussed in sections 94-101
Damages for skimped services can be awarded based on the difference in value between the promised and delivered service, regardless of further loss.
Chitty on Contracts (35th ed); Attorney General v Blake [2001] 1 AC 268; White Arrow Express Ltd v Lamey’s Distribution Ltd [1995] CLC 1251; Morris-Garner v One-Step (Support) Ltd [2018] UKSC 20
The Upper Tribunal's jurisdiction on a reference is defined by 'the matter' referred, encompassing anything with a real and significant connection to the subject matter of the process leading to the decision.
FSMA s. 133; Case law discussed in sections 123-202
Outcomes
The FCA's appeal on Ground 1 (regarding the power to impose a single-firm redress requirement) was allowed.
The power to impose a single-firm redress scheme derives from s. 55L, is not constrained by s. 404F(7), and does not require the 'Four Conditions' (loss, causation, duty, actionability).
The FCA's appeal on Ground 2 (regarding the amendment application) was allowed.
The Upper Tribunal had jurisdiction to allow Amendments 3 & 4 (relying on Principle 7 and COBS 4.2.1) as they have a real and significant connection to the subject matter of the case. Amendment 2 was properly allowed.
BCMUK's cross-appeal against the decision to allow Amendment 2 was dismissed.
No error of law in the Upper Tribunal's exercise of discretion.
Similar Cases
The Financial Conduct Authority v Thomas Seiler & Anor
[2024] EWCA Civ 852
Stephen Joseph Burdett & Anor v The Financial Conduct Authority
[2024] UKUT 156 (TCC)
Markos Markou v The Financial Conduct Authority
[2023] UKUT 101 (TCC)
Toni Fox-Bryant & Anor v The Financial Conduct Authority
[2023] UKUT 259 (TCC)