Two advisers have lost their bid to order the Financial Conduct Authority to disclose documents relating to an investigation about them.
John and Colette Chiesa sought an order against the FCA to disclose all relevant records of their investigation.
Mr and Mrs Chiesa, who were partners in Westwood Independent Financial Planners, were investigated in 2008 for their firm’s sale of geared traded endowment policies.
This resulted in Westwood being fined £100,000 for mis-selling GTEPs.
But the couple accused the FCA of acting in bad faith and that it sought to “trap” Mrs Chiesa.
They applied for access to all records involved in the decision-making process surrounding the investigation.
But Judge Greg Sinfield, sitting in the Upper Tribunal, dismissed the request saying they had no evidence on which to base their request.
He said: “In the absence of direct evidence, it seems to me that counsel for Mr and Mrs Chiesa are compelled to contend that it is necessary for disclosure to be provided so that any allegations of bad faith and abuse of process can be properly pleaded by them and to enable the tribunal to deal with the case fairly and justly. I do not accept that submission.
“It amounts to the proposition that merely asserting that there has been bad faith justifies ordering disclosure. In my view, that cannot be correct.
“The person making the application bears the burden of proving, to the normal civil standard, that there was bad faith or some other abuse of process. In my view, Mr and Mrs Chiesa have failed to discharge that burden.”
As partners with unlimited liability in Westwood, Mr and Mrs Chiesa were liable for Westwood’s debts.
In October 2011, Mr and Mrs Chiesa entered sequestration and at the time they had “significant” liabilities due to the need to pay compensation in respect of numerous complaints relating to advice given by Westwood.
Westwood, and therefore Mr and Mrs Chiesa, had liabilities of more than £5m, mainly from customers’ claims against the advice firm.
The FCA alleges that, in the build-up to sequestration - the seizure of property for creditors or the state - Mr and Mrs Chiesa took a variety of steps to protect their assets and money from tax and creditors’ claims, including lying about the value of Mrs Chiesa's jewellery.
damian.fantato@ft.com
