The following statement was issued by Blakely law:

The Royal Court has issued an extremely critical judgment of the Financial Services Commission in which it says the Regulator acted unfairly.

Recently we gave details of a judgment concerning a dispute between an IFA company, SWM Limited, and the JFSC.  At that time the court was still preparing another judgment between the same parties from an earlier hearing.  That latest judgment was handed down on 11^th May 2016.
The judgment is very clear about the Royal Court’s view of the conduct of the Regulator.

Background

SWM had been issued with a Direction by the JFSC compelling SWM to write letters to some of its clients  (in a form required by the Regulator) concerning investment advice SWM had given to those clients.  On behalf of SWM, Advocate Blakeley argued the Direction was inappropriate not least because the sending of letters was grossly premature. He requested the court impose a stay upon the Direction.  In his submissions, Advocate Blakeley said the JFSC had prejudged matters; was unfairly depriving SWM the opportunity of preparing a defence; that the JFSC had caused long delays and was trying now to blame SWM for those delays; the regulator had been obstructive and obtuse; and it had purported to exercise powers it simply didn’t possess.  These actions by the regulator gave a clear appearance of bias if not actual bias.

Judgment

The Royal Court granted SWM’s application and stayed the Direction.  In an extremely critical judgment the Court, comprising the Deputy Bailiff and two Jurats, contained the following very clear statements:

“We cannot escape the view that the Commission has not on this occasion dealt fairly with SWM in that it appears on the correspondence to be preventing SWM from obtaining proper advice and from seeking evidence…”

“…SWM’s submission was that this was unfair and it had the legitimate concern that the JFSC’s mind had already been made up.  Furthermore by reason of the reluctance of the JFSC to permit SWM to commission its own report…SWM was being placed into an untenable position.”

“Suffice to say that in our view, in its desire to procure its own evidence and to disclose information necessary for it to do so, SWM has not been assisted by the Commission.”

“The correspondence reflects increasing frustration on the part of SWM which is met by bland or uninformative responses for the most part by the Commission.”

“…it is difficult to see that any allegation of delay can be laid at the door of SWM.”

“We cannot escape the view that the Commission has not on this aspect and occasion dealt fairly with SWM in that it appears on the correspondence to be preventing SWM from obtaining proper advice and from seeking evidence particularly in circumstances where the Commission is giving every indication…that it has already decided that there has been misselling …”

 “We cannot but observe that the reader of the Commission’s letter might reasonably assume that as far as the Commission was concerned all the matters disputed by SWM were already established beyond doubt.”

“We understand the sensitivity of the Commission…However in our view it does not sit comfortably that SWM has effectively been blocked from seeking its own advice and counsel…”

Comment

Blakeley Legal is very proud to have been able to represent SWM and win this very important decision against the Commission.  Judgments against the JFSC are few; judgments which openly criticise the Commission to this extent are practically non-existent.  While our firm has previously won cases against the regulator this judgment is a real turning point. We believe more and more companies regulated by the JFSC will now be more ready to bring challenges alleging abuse of powers.

The judgment carries very clear messages to the Commission which include:

• The Commission was wrong to have required SWM to send letters to clients at a time when it was aware that SWM had not had the chance to properly defend itself.
• The regulator had proceeded as though findings of a report written by a company that the JFSC itself had selected, were “unassailable”
• The regulator had not treated SWM fairly
• The Commission had not assisted SWM
• Correspondence from the regulator regarding SWM’s legitimate concerns was singularly unhelpful
• It appeared the JFSC had already made its mind up on matters which were yet to be fully investigated

This judgment is a severe blow to the Commission.  SWM told the court very clearly it had lost all trust and confidence in the Enforcement Division of the JFSC and it felt oppressed by the regulator’s actions and that the regulator had used non-existent powers to paralyse SWM.  SWM considered it was forced into a boxing ring with its arms and legs bound and where the referee appeared to have already decided the outcome.  In this firm’s view, a radical change of approach needs to be adopted urgently by the JFSC to the way in which it carries out investigations and that such a review is horribly overdue.

If you are interested in reading the full judgment it will be published shortly on the Jersey Legal Information Board which can be found here: www.jerseylaw.je

Alternatively, if you can’t wait until then, please email us at info@blakeleylegal.com and we will send you a copy of the judgment.

Blakeley Legal has specialised experience in dealing with JFSC issues and has a proven track record of success.  We also advise and act for clients in challenging the decisions and actions of other public bodies and government departments.  Again, we have a history of successful cases in this area including the Competition Regulator, the Education Department and the Planning Department.  If you would like more information on these matters (including our work in representing clients before the Board of Commissioners of the JFSC) or if you would like to be directed to previous judicial review judgments and decisions please contact us.

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