Regulation  

How much opinion can a regulator have on your personal life?

Andrew Katzen

Andrew Katzen

Few who work in the financial industry can have failed to notice that the regulatory environment for professional advisers has changed significantly over the past five years.

Over this period the Financial Conduct Authority has taken a growing interest in behaviour that occurs in what may once have been considered someone’s ‘personal’ life.

Unpleasant, offensive and (sometimes) illegal activity – such as bullying and sexual harassment – has been held by the FCA to constitute non-financial misconduct, which merits serious sanction.

It is a policy that we might, for lack of better term, call a #MeToo approach, and it is being adopted across the regulatory world.

But nearly five years on from the agency’s first public pronouncements on this topic, how is the policy working out for the FCA, for other regulators like it, and for the professionals they oversee?

“Sexual harassment is misconduct”

In September 2018, Megan Butler, then the FCA’s executive director of supervision – investment, whole and specialists division, wrote to MP Maria Miller to expand on comments she had made to parliament’s Women and Equalities Committee.

In her letter, Butler was explicit in saying that, as far as the FCA is concerned, “sexual harassment is misconduct”.

She spelt out various ways this approach would impact the agency’s misconduct procedures, including on the senior manager programme under which FCA-regulated individuals must be “fit and proper”.

“Senior managers must be approved by us,” Butler wrote. “We assess their competence, honesty, integrity and reputation to ensure that they are fit and proper to do so.

“This means we will, for example, consider if an individual has had a criminal conviction, sanctions for discrimination, harassment or sexual misconduct.”

Two years later, in November 2020, the FCA banned three men from working as financial advisers following findings by its Regulatory Decisions Committee that they were not “fit and proper”.

Russell David Jameson was banned following his criminal conviction for child pornography offences. Mark Horsey was banned following his conviction for voyeurism. Frank Cochran was banned following his convictions for sexual assault, engaging in controlling and coercive behaviour and a harassment offence.

None of the men challenged the decision by referring their cases to the Upper Tribunal.

The FCA, it seemed, was good to Butler’s word. As Mark Steward, executive director of enforcement and market oversight, said at the time: “The FCA expects high standards of character, probity and fitness and properness from those who operate in the financial services industry and will take action to ensure these standards are maintained.”

Boundaries of personal life

The FCA is not the only professional regulator to have adapted its misconduct procedures to better fit evolved social mores.

In January 2020 the Solicitors Regulation Authority announced that Ryan Beckwith, formerly a partner at magic circle law firm Freshfields Bruckhaus Deringer, had breached its professional standards by having sex with a colleague after a social event at which both had been drinking alcohol.