Regulation  

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

Andrew Katzen

Andrew Katzen

Beckwith admitted to the Solicitors Disciplinary Tribunal that he had kissed the woman – his appraisee – in a pub and then accompanied her in a taxi to her home, where he said a consensual sexual encounter took place.

For his part, Beckwith said that the incident, which started outside the office, ended in a private home and for which no criminal prosecution was ever brought, was beyond the SRA’s remit.

The SDT disagreed. It ruled that Beckwith had acted without integrity and had threatened the trust placed in him by the public. He was ordered to pay £200,000 in costs and a £35,000 fine.

However, unlike the FCA cases mentioned above, Beckwith appealed.

In November 2020 the High Court reversed the SDT’s decision. It ruled that for sexual misconduct cases that had not resulted in a criminal conviction, disciplinary findings should only occur when there is a clear link to, and resultant breach of, the SRA’s code and principles.

The High Court’s ruling was definitive: poor personal behaviour should not, necessarily and on its own, result in professional sanction.

“Regulators will do well to recognise that it is all too easy to be dogmatic without knowing it,” Justice Swift wrote in his judgement. “Popular outcry is not proof that a particular set of events gives rise to any matter falling within a regulator’s remit.”

The Frensham quandary

In October 2020 the FCA banned Jon Frensham from working as financial adviser after he was convicted of attempting to meet a child following acts of sexual grooming – a crime for which he received a 22-month jail sentence, suspended for 18 months.

Like Beckwith before him (but unlike David Jameson, Horsey and Cochran), Frensham challenged his ban. He referred the RDC’s decision to the Upper Tribunal.

This time the court upheld the ban. But it did so primarily on the basis that Frensham had failed to be frank with the regulator about his circumstances.

Crucially, the Upper Tribunal rejected the FCA’s apparent assumption that a criminal conviction of Frensham’s sort should automatically lead to prohibition.

“The basis on which the Authority seeks to link Frensham’s lack of personal integrity to his professional role on the basis of the nature of the offence alone is speculative and unconvincing,” the court ruled.

In order to prove non-financial misconduct, it said the FCA needs to show clearly how the behaviour in question breached specific FCA rules and principles.

As if the parallel with Beckwith’s case was not clear enough, the Upper Tribunal cited the High Court judgement in that case directly, re-iterating its warning that regulators should “not act... on popular outcry”.

Where to now?

There was a time, not so long ago, when a regulated professional might relatively easily define which areas of his or her life their regulator was entitled to police, and which areas it couldn’t.