Tribunal refuses suspension application

Sussex Independent Financial Advisers Limited had applied to the Tribunal for a suspension of the FCA’s decision to vary its permission to remove all its permitted activities on the basis that the firm did not meet the threshold conditions, until a full reference had been disposed of.  The firm had outstanding FOS awards against it, and the FCA considered that when these liabilities were taken account of, the firm would be insolvent and therefore not meet the threshold condition of holding appropriate resources.  Also, the FCA deemed the firm not fit and proper as it had sought to encourage the complainants to settle for lesser awards than the FOS had awarded.

The firm objected, saying it had an outstanding claim against its PI insurers for at least some of the FOS award money and also that its directors would inject additional cash if the FCA would agree not to vary the permissions.  They took the stance that there was no point injecting cash if the firm would not be allowed to carry on its business.

Despite two of the FOS award recipients requesting that the firm be allowed to continue in business, on the basis they would be prejudiced by receiving less money if they needed to claim from the FSCS than they were owed by the firm, the Tribunal held that the majority of consumers’ interests would be prejudiced if the suspension order were granted, and that it was in fact unclear whether the two recipients who claimed their interests would be prejudiced were actually correct – given the impasse between the FCA and the firm, the Tribunal described the benefit of those FOS settlements as “illusory”.  Additionally, it was not clear that the firm would win its case against its PI insurers, who had refused to pay out on the basis that the firm’s insurance renewal form had contained materially incorrect information – and the FOS had provisionally agreed with this.

The Tribunal dismissed the suspension application and directed the parties to try to agree directions on the final reference hearing within 7 days.


Audrey Koh

Audrey Koh