Further to an earlier Upper Tribunal Decision, FSA has now published the Final Notice in respect of the above. The Tribunal had upheld FSA’s decision to reject the firm’s application for authorisation and the inpidual’s application for approval on the grounds of the latter’s lack of honesty and integrity.

Chancery Division, Companies Court 16 May 2013 (judgment given extempore) Administrator — Appointment — Formalities — Financial services company — Consent of Financial Conduct Authority required to be obtained for appointment of administrator — Notice of intention to appoint administrators filed prior to consent from Financial conduct Authority — Consent from FCA being filed on day after filing of notice — Whether failure to obtain prior consent invalidating appointment of administrators — Whether administrators being validly appointed — Insolvency Act 1986, Sch B1, paras 22, — Financial Services and Markets Act 2000, s 362A. Section 362 A of the Financial Services and Markets Act 2000 provides: '(1) This section applies in relation to a company or partnership of a kind described in section 362(1)(a) to (c). (2) An administrator of the company or partnership may not be appointed under a provision specified in subsection (2A) without the consent of the appropriate regulator…(3) Consent under subsection (2)(a) must be in writing, and (b) must be filed with the court along with the notice of intention to appoint under paragraph 27 of Schedule B1 to the 1986 Act or paragraph 28 of Schedule B1 to the 1989 Order. (4) In a case where no notice of intention to appoint is required (a) subsection (3)(b) shall not apply, but (b) consent under subsection (2) must accompany the notice of appointment filed under paragraph 29 of [Schedule B1 to the 1986 Act or paragraph 30 of Schedule B1 to the 1989 Order]'. The company concerned in the proceedings was a London based company which acted as an international property investment agent, specialising in luxury resorts in the Caribbean. Around mid-April 2013, the directors of the company, D and C, took insolvency advice and subsequently instructed solicitors to enter the company into administration. Prior to doing so, the solicitors contacted the Financial Conduct Authority (FCA) to enquire whether FCA consent was required, pursuant to s 362A(3)(b) of the Financial Services and Markets Act 2000 (the 2000 Act), as amended, prior to filing the notice of intention to appoint administrators. A representative of the FCA informed the solicitors, via telephone, that consent was not required. Relying on that advice, on the 3 May 2013, the solicitors filed notice of intention to appoint administrators pursuant to para 22 of Sch B1 to the Insolvency Act 1986 (the 1986 Act). The notice of intention was served on the company. The following day, the FCA sent an email to the company's solicitors, informing them that the previous information had been incorrect, that FCA consent was required, and attaching that consent. On the same day, the company's solicitors filed the FCA's consent with the court. Considering that the validity of the appointment of the administrators might be called into question because the FCA consent had not been filed on the same day as the notice of appointment of the administrators, the directors and the administrators of the company (together the applicants) applied to the Companies Court for a declaration that the administrators had been validly appointed. The issue for consideration was whether the administrators had been validly appointed having regard to the fact that the FCA's consent had been filed at court the day after the notice of intention to appoint administrators, rather than on the same date. The applicants submitted that the administrators had been validly appointed for alternative reasons. First, on the true construction of s 362A(3)(b) of the 2000 Act, the words 'must be filed with the court along with the notice of intention to appoint' did not require that consent be filed at court simultaneously with the notice of intention (the first submission). In support of that contention, reliance was placed on Re Ceart Risk (Ceart) [2012] BCLC 645; [2012] All ER (D) 43 (May) (para 19). Alternatively, the applicants submitted that, even if there was a defect, such defect was curable and had been cured when the FCA's consent had been filed (the second submission). The application would be granted. It was settled law that the words 'may not be appointed… without the consent of the Authority' clearly indicated that it was essential to obtain the FSA's consent. They did not clearly indicate that it was essential to do so prior to the appointment. It followed, as concluded in Ceart, that s 362A(2) should not be interpreted to mean that failure to obtain prior consent of the FSA should invalidate the appointment of administrators under para 22 of Sch B1 to the Act. On its true construction, the wording of s 362A did not compel the conclusion that the consent had to be filed at the same time as the notice of intention to appoint or notice of appointment, as the case might be. As the court held in Ceart, a consent filed the following day could still be said to have been filed 'along with' a notice of intention to appoint or to 'accompany' the notice of appointment. Further, Parliament should be taken to have intended that failure to obtain the FSA's prior consent constituted a defect in the appointment which was capable in appropriate circumstances of being cured subsequently. In respect of the first submission, there was no reason to depart from what had been said in Ceart and the court would adhere to the construction of s 362A(3)(b) of the 2000 Act in that case. The construction of s 362A(2) of the 2000 Act in Ceart was also adopted. Accordingly, there was no defect in the appointment of the administrators in the instant case. In short, the FCA's consent had been filed with the court along with the notice of intention to appoint administrators even though it had been filed the day after the notice of intention to appoint. In respect of the second submission, applying settled law, and for the same reason in Ceart, if there was a defect in the appointment of the administrators by virtue of the fact that the FCA consent had been filed the day after the notice of appointment, that defect was curable and had been cured when the FCA's consent was filed the following day. Accordingly, the administrators had been validly appointed on 3 May 2013. A declaration would be granted accordingly. Ceart Risk Services Ltd, Re; Bootes v Ceart Risk Services Ltd [2012] 2 BCLC 645 applied; Hill v Stokes plc [2011] BCC 473 Virtualpurple Professional Services Ltd, Re [2012] 2 BCLC 330 Euromaster Ltd, Re [2012] All ER (D) 84 (Aug) Bezier Acquisitions Ltd, Re [2012] 2 BCLC 322 considered.

This guidance consultation sets out FCA’s expectations of firms which are involved in the transfer of investors from pre-RDR unit classes to post-RDR unit classes. It look at: whether a conversion to a clean unit class should be treated in the same way as a switch of units; whether conversions can happen in bulk rather than inpidually; if conversions can happen without express consent of the relevant unitholder(s); whether advice is needed; the role of advisers in the conversion process, and whether a new disclosure document needs to be issued to each relevant unitholder before conversion. Responses are required by 23 November 2013.

Text of the above follows. He discusses trust in the financial services sector; RDR; suitability; FCA’s approach (for example, through thematic reviews rather than visits – “it has the great benefit of allowing markets to respond en bloc before there is any widespread call for enforcement action or redress”) and European developments.

FCA has published the above-mentioned guidance consultation which includes details of a review it conducted to find out whether firms continue to be influenced by inducements from product providers in spite of the RDR. The review found some life insurance firms had arrangements in place which could influence advisers, contrary to the RDR’s aim of removing commission bias in financial advice. It notes that some payments by life insurers to advisory firms appeared to be linked to securing sales of their products; financial arrangements in place with life insurers that incentivised advisory firms to promote a specific provider’s product to their advisers and noted that certain joint ventures, where a new investment proposition is jointly designed by providers and advisory firms, could create conflicts of interest and potentially lead to biased advice. FCA notes that many of the firms involved in this review have now changed their arrangements as a result of early action by FCA and that two firms have been referred to enforcement. The proposed guidance has been published for consultation which explains why FCA thinks certain payments between providers and advisers may cause conflicts of interest and provides examples of good and bad practice. This includes how advisory firms might want to deal with conflicts caused by providers paying for IT development and maintenance, staff training, conferences and seminars, hospitality, research and promotional activities Responses to the GC are required by18 October 2013.

TSC has published a transcript of the corrected evidence with respect to the hearing held on 10 September 2013 attended by Martin Wheatley of FCA. Topics discussed include: interest rate hedging products; FCA’s independence; tailored and unregulated business loans; competition in the banking sector, including account switching and portability; the savings thematic review; payday lending; PPI; Project Verde; annuities’ benchmark manipulation and RDR.

FCA proposes to: add four new qualifications to the appropriate qualifications list in TC and amend the details of three existing qualifications; make minor amendments to the rules on platform charges and draft rule and guidance clarifying the treatment of legacy business in relation to cash rebates from providers to consumers; clarify rules on reporting suspicious transactions; amend PR to clarify timing and method of filing a prospectus with FCA; set out its approach to using its enforcement powers under the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Referral Fees) Regulations 2013; make various minor amendments to reporting mechanisms; make changes to chapter 9 of SUP to reflect its decision to discontinue the Listing Authority Review Committee; clarify the application of inflation-adjusted projections to in-force pensions business; incorporate the ESMA Guidelines on ETFs and other UCIS issues into COLL; implement the changes made by HMT to reflect and make firms aware of FCA’s powers set out in further domestic legislation regarding EMIR; remove the legacy concept of designated investment exchanges from non-prudential Handbook modules; defer the date that rules around the provision of fund information to investors through nominees come into force; provide guidance on the AIFM Remuneration Code (SYSC 19B) arising from the issuance of the ESMA guidelines on sound remuneration policies under the AIFMD; make minor consequential amendments to the Handbook arising from the implementation of AIFMD; and make consequential amendments to the Handbook arising from the implementation of CRD IV for investment firms Responses are required by 6 October 2013 or 8 November 2013 (see section 1 for full details).

FCA has published figures revealing that in July 2013 there were 32,690 retail investment advisers working in the UK, within the range predicted by independent researchers commissioned by FSA in 2012. (FCA has now published the full reports – see second and third links below). The number of advisers has risen from 31,132 since December 2012, the last time the numbers were officially counted. FCA believes the increase is attributable to advisers re-entering the market. The press release also notes that, post-RDR, 97% of advisers have the appropriate level of qualification, with the final 3% recent entrants who are still studying within the timescales permitted by the rules, adding that in 2010 less than half of all advisers were qualified to today’s standard.

FCA has published minutes of its meeting held on 27 June 2013. Topics discussed include: RDR “state of the nation” report; presentation setting out the potential expectations gap between FCA and regulated firms and FCA professional standards report.

The Financial Conduct Authority (FCA) has published an early review of how advisory firms have implemented some of the core aspects of the Retail Distribution Review (RDR) months after its implementation. The RDR came into effect in the New Year and made significant changes to the investment advice market. RDR made clear how much consumers pay for financial advice, what they pay for, and improved professional standards by introducing a minimum level of qualification for all investment advisers. Undertaken between February and April 2013, the research published today looks at how advisers had implemented some of RDR’s requirements. It found that the majority of firms have made progress and there was a willingness to adapt to the new rules.