Keydata founder Stewart Ford has challenged the FSA’s use of what he claims is legally privileged information in its investigation into Keydata at a judicial review in the High Court last week.
In May, Money Marketing revealed that Ford had secured a judicial review hearing against the FSA.
At the two-day hearing at the Royal Courts of Justice in London last week, Ford’s lawyer Mr Malek argued that emails which formed the basis of the FSA’s warning notice against Keydata and subsequent investigation reports were subject to legal professional privilege.
As a result, Malek argued these emails cannot form part of the FSA’s enforcement investigation into Keydata.
The emails were passed from Ford’s former lawyers Irwin Mitchell to the FSA via Key-data’s administrators PricewaterhouseCoopers.
Malek said: “We are concerned that the FSA prides itself on being fair and transparent but we argue it was neither fair nor transparent in the way it got that information.”
Malek said that if the presiding judge, Justice Burnett, were to rule that legal privilege did apply, then the original warning notice should be scrapped, with a new enforcement team appointed to continue the FSA’s Keydata investigation.
The content of the controversial emails cannot be disclosed due to reporting restrictions, although Justice Burnett said he may review this at a later date.
Lead counsel for the FSA Mr Thanki said: “The short argument is that the FSA has made an error in the rule of law and we would argue it has not.”
Both Malek and Thanki agreed that in passing the emails to the FSA, PwC had waived the legal privilege which applied to Keydata but Malek argued that Ford, sales director Mark Owen and compliance officer Peter Johnson still retained individual privilege over the emails in question.
The FSA argument centred on whether Keydata management received advice from Irwin Mitchell in a personal capacity, or whether it was purely in the context of their roles at Keydata. Thanki argued it was the latter and therefore privilege did not apply.
Ford did not address the court but Johnson and Owen read from their witness statements. Both men are listed as interested parties alongside Ford.
Mark Owen: I was surprised and shocked to see the FSA had used this information that we thought was subject to legal privilege
They said they understood that Irwin Mitchell lawyer Sarah Wallace was acting both for them as individuals and for Keydata as a company.
In his statement, Johnson said: “The FSA was not privy to the conversations with Sarah Wallace and it is not for the FSA to decide the nature of those conversations. If we thought that Sarah Wallace was not acting for us as individuals, we would have sought individual representation. It is outrageous that the FSA should look to perceive it to the court in any other way.”
Johnson said he only learned of the FSA’s alleged use of privileged information on reading the FSA’s supplementary investigation report.
He added: “I am horrified that a public body such as the FSA would act in such an underhand way.”
Owen said: “I believe and was advised that we all had legal privilege both as individuals and as the firm. This was repeated to us on many occasions. I was therefore surprised and shocked to see the FSA had used this information that we thought was subject to legal privilege.”
Justice Burnett will hand down his judgment on the case in September.