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FSA looks to dispute overturned rulings

The FSA has for the first time applied to appeal against a Financial Services and Markets Tribunal decision in relation to a case against Leeds solicitor firm Fox Hayes.

The appeal relates to two decisions by the FSMT, in September 2007 and March 2008, which reduced an FSA fine from £150,000 to £70,000 after finding the regulator was wrong in conclusions it reached about the firm.

The FSA ruled that Fox Hayes had approved a number of promotions for unauthorised overseas companies and failed to ensure the promotions were clear, fair and not misleading. It also found that the solicitors had reason to doubt the honesty of the overseas firms.

But the FSMT ruled that the FSA was largely wrong to reach these conclusions although it did concede that Fox Hayes had reason to doubt the overseas firms’ honesty.

However, during the FSMT hearing, it was revealed that one of Fox Hayes’ partners, Robert Manning, had received further commissions for share transactions without disclosing them. The FSMT added £74,400 to the fine, bringing the total to £146,000.

The FSA says it has made the application because it believes errors of law have been made in interpreting regulatory rules and that the penalty imposed does not properly reflect the misconduct.

The Financial Services Consumer Panel says it supports the FSA’s application and is concerned that the FSMT has taken a “very literal interpretation” of the rules and regulations in reaching its decision.

Acting panel chairman Adam Phillips says: “It is crucial for the FSA’s move to more principle-based regulation that the tribunal recognises principles in enforcement decisions.”


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