Don’t forgive and don’t forget? The uphill battle to return to work for individuals banned by the FCA and SRA
15 Jan 2024
Professional regulators always have the power to ban people from their chosen profession. Sometimes these individuals want to return to work. In a blog, Tom Bushnell explains how the FCA and SRA handle bans, and examines two case studies in which their subjects have tried to revoke or change them.
Of all the sanctions a professional regulator can impose on an individual found in breach of its rules, the most impactful is probably the ability to exclude a person from their chosen profession.
Different regulators give this power different names. The Financial Conduct Authority (FCA) uses ‘prohibition orders’; the Solicitors Disciplinary Tribunal (SDT) ‘strikes individuals off the Roll’; the Bar Tribunals and Adjudication Service (BTAS) ‘disbars’ barristers; the Medical Practitioners Tribunal (MPTS) ‘erases doctors from the medical register’.
But if a professional is ‘banned’ by their professional regulator, what does this mean? How long are they excluded for? Is there any way back once someone has been banned?
In an attempt to answer these questions, this blog considers the policy and practices of the FCA and the SDT, and explores the subtle differences between them.
The FCA’s power to ban financial services professionals
The FCA’s power to prohibit individuals is found in s. 56 of the Financial Services and Markets Act 2000 (‘FSMA 2000’).
Under this provision, the agency can prohibit someone from ‘performing a specified function, any function falling within a specified description or any function.’ This may relate to ‘a specified regulated activity, any regulated activity falling within a specified description or all regulated activities.’ The FCA’s decision, in October 2023, to ban former Barclays CEO Jes Staley was a high-profile example of the use of this power.1
In practice, the FCA sometimes opts for what has become known as a ‘total’ prohibition which prohibits the sanctioned individual from performing any function in relation to all regulated activity.
S. 56 does not explicitly provide for prohibition orders to be time limited. FCA prohibitions are therefore open-ended. The agency can impose a de facto time limit by indicating when, in the future, it would be ‘minded’ to revoke the prohibition order (if asked to do so and in the absence of new evidence that the individual is not fit and proper (EG 9.2.4)).
However, the FCA rarely exercises this option, even when it is specifically suggested.2 Individuals are routinely left to work out themselves how long to wait until they go back to the FCA to ask for the order to be lifted or varied.
While it will always be an uphill battle, it is possible under s. 58 FSMA 2000 to successfully vary the terms of an FCA prohibition order, or seek its revocation.
The lessons of David King’s unsuccessful attempt to vary his FCA ban
The case last year of former insurance company director David King is a useful example to consider when attempting to determine the boundaries of a successful application to vary an FCA ban.
The FCA banned Mr King from working in financial services in July 2021 following his convictions for theft, fraud and money laundering. He was sentenced to six years and four months in prison.
The criminal offences related to behaviour which took place between 2010 and 2017, and involved Mr King defrauding family members by taking their share of his grandparents’ estate which they had inherited. Mr King was, at that time, an approved person at various authorised firms. The FCA imposed a total prohibition. It did not exercise its power to indicate when it might consider revoking the order.
In February 2022, seven months after his ban, Mr King applied for the order to be varied. By this time he had been released from prison on licence. He wanted the prohibition order changed so he could pursue employment as a rural chartered surveyor (at an employer who engaged in regulated insurance activities).
Mr King advanced various arguments for why he should be permitted to work. These included that he had been successfully rehabilitated (providing evidence of charitable work and character references); that any risk posed by him would be mitigated by the safeguards in place at his prospective employer; and (making a virtue of a particularly difficult aspect of his case) that he could still be recalled to prison for any suspected re-offending.
The FCA was unmoved. It refused to interfere with the prohibition order. Its Final Notice reiterated the various aggravating factors in Mr King’s previous offending. It explained that it was unpersuaded that Mr King’s previous ‘unfitness’ had been remedied, saying that there had been insufficient ‘time and opportunity’ for him to rehabilitate.
The lack of opportunity to rehabilitate or prove his integrity is an interesting point: the FCA’s Final Notice states ‘Mr King has thus far been unable to provide sufficient evidence of having been in a role which gives rise to relevant opportunities for re-offending.’ Similarly, the FCA criticised the fact that Mr King’s character references failed to ‘provide evidence of his conduct in situations where he was exposed to relevant opportunities for re-offending.’
In other words, in order to successfully vary or revoke an FCA ban, the individual in question must have been in a position where they may have been tempted to repeat their misconduct… but did not succumb. The onus is firmly on the individual to prove their rehabilitation.
Individuals in Mr King’s situation might feel aggrieved at the sense of circularity here. How can people in this situation be expected to prove they no longer pose a risk to the public if they cannot get into a position to show this?
The FCA’s decision in the David King case is an example of the broad discretion the agency enjoys in these cases; the full range of circumstances it will consider; and the uphill battle for professionals seeking to undo their prohibitions.
The SDT’s power to strike solicitors from the Roll
Solicitors are regulated by the Solicitors Regulation Authority (SRA). However the SRA does not have the power to ban solicitors it suspects have committed the most serious misconduct. For these cases, it instead issues proceedings before the Solicitors Disciplinary Tribunal’s (SDT), an independent tribunal.
The SDT’s power to strike solicitors off the Roll derives from the Solicitors Act 1974 and has, over the years, been the subject of appellate caselaw.
It the most serious sanction in the SDT’s armoury. The SDT’s guidance note on sanctions makes clear that it is reserved for misconduct of a seriousness ‘at the highest level’, where a lesser sanction would be inappropriate.
Just as with the FCA, the SDT’s power to ban is an indefinite disposal, rather than one expressed by reference to a time period (not to be confused with a fixed term of suspension).
A former solicitor who has been struck off the Roll can, in time, apply for restoration. The application must be ‘advertised’ first in the Law Society’s Gazette and in the local press, so that interested persons can respond to it. The SDT has helpfully published detailed guidance on such an application, in its Guidance note on other powers of the tribunal. The following key points emerge:
- An application for restoration is not an appeal against the original order to strike off: instead, it is a present and future looking assessment of whether the person is fit and proper.
- It remains extremely unlikely that a solicitor will ever be restored after a finding of serious dishonesty (applying cases such as Bolton v Law Society  EWCA Civ 32) or conviction for an offence involving dishonesty (Solicitors Regulation Authority v Kaberry  EWHC 3883 (Admin)).
- An application for restoration less than six years after the strike off is, other than in the ‘most exceptional circumstances’, likely to be premature.
- The person will need to show evidence of rehabilitation – usually in the form of ‘substantial and satisfactory employment within the legal profession’, plus evidence of future employment intentions.
The points above show that the hurdle to achieve restoration is high (and virtually impossible in dishonesty cases given the ‘cardinal importance’ of trust in the profession).
Much as with the FCA, an applicant must demonstrate their rehabilitation, ideally within a legal workplace. Unlike the FCA, however, struck off solicitors have a specific number of years to use at least as a starting point when considering a restoration application.
The lessons of Solicitor AK’s successful return to the Roll
A rare example of a solicitor overcoming the high bar to a return to the Roll was published in April 2023. The solicitor in question, AK, had been struck off the Roll in 2012 following various breaches of the Solicitors Accounts Rules and related duties. Whilst not finding him dishonest, the SDT in 2012 had said AK was ‘guilty of gross dereliction of duty both as a partner and as a trustee of his clients’ monies.’
AK waited 10 years to apply for restoration: comfortably over the six-year guidance. In the meantime, he had undertaken employment approved by the SRA in law firms, as well as other unregulated legal work.
He had set up charities and undertaken considerable amounts of training to keep abreast of developments in legal practice. He also had a job offer to work as an assistant solicitor within an SRA-regulated firm which was willing to carefully supervise him.
AK’s efforts to prove his rehabilitation were extensive. But despite all this, the SRA still opposed the application (albeit conceding it had ‘some merit.’) The SDT however carefully weighed up the arguments and ultimately decided that AK could be restored to the Roll, subject to stringent conditions.
Opinion: The FCA and SDT regimes contrasted
Front and centre of any professional regulator’s role is the protection of the wider public, and the maintenance of the reputation of the profession in question. As such, professional regulators must be able to ban those who fall short of the standards required of them.
It should therefore come as little surprise that regulators always possess and exercise a power to ban their professionals from future activity. The effect of this prohibition is almost always extremely serious for the individual, harming their employment prospects, financial position and reputation.
But because of the seriousness of any ban, the use of the power must be tempered by proportionality. It is also to everyone’s benefit for regulators to give clear guidance – subject to suitable caveats to make clear that no-one can predict the future – as to the minimum length of a prohibition or when individuals can re-apply.
In this respect, the SDT sets a better example in the FCA. There is a good argument for the FCA to start using its own power in EG 9.2.4 to identify when it would be minded to accept an application for revocation of the prohibition order. Doing this would not tie the FCA’s hands in the future, but it would give the individual involved (and those who might employ them in the future) a sense of the timescales involved.
What the FCA and SDT have in common is how firmly the onus is on applicants seeking a return to their respective professions. The challenge for individuals in this position will therefore always be to obtain suitable experience without falling foul of the prohibition, and despite of the existence of it.
Tom Bushnell is an associate barrister in Hickman & Rose’s regulatory and business crime team. He is experienced in defending regulated professionals, in both regulatory and criminal investigations or proceedings. He has particular expertise in investigations and proceedings brought by the Financial Conduct Authority.
- Mr Staley denies the allegations and has, at the time of writing, referred the FCA’s decision to the Upper Tribunal which will decide, amongst other things, whether the FCA was right to prohibit him. ↩︎
- The author could not find an example of the FCA limiting a prohibition order anytime over the past five years. The Upper Tribunal hinted that the FCA ought to give Arif Hussein an indication when it dismissed his reference with regard to LIBOR submissions but expressed sympathy with many aspects of his position: see para 226. The FCA – perhaps rather meanly – did not include any such indication in its Final Notice. More recently, an individual invited the FCA to make an indication if it imposed a prohibition order. Again, the FCA declined: Darren Reynolds Decision Notice, published on 28 September 2023, Annex B, paras 118-120. ↩︎