Obligations For Approved Persons Don’t Stop At The Office Door

Author:Mr Colin Smith, Harvey Knight and Kirsten Lapham
Profession:Withers LLP

On 15 December 2014, the Financial Conduct Authority ('FCA') banned Jonathan Burrows, a former Managing Director at Blackrock Asset Management Investor Services Limited, from working in the financial services industry. This is a timely reminder that individuals who work in the financial services industry must demonstrate honesty and integrity in their personal, as well as their professional life.

The FCA has been placing an increasing emphasis on the importance of holding individuals to account for their behaviour as part of their objective of changing the culture within firms. The FCA wants senior individuals to set the culture of their firms by demonstrating ethical behaviour. Central to this approach, is the requirement that these individuals should act with honesty and integrity, including in their private lives. Tracey McDermott, the FCA's director of enforcement, summarised the FCA's approach as follows: 'Approved persons must act with honesty and integrity at all times and, where they do not, we will take action'. Mr Burrows' ban serves as a reminder that approved persons must be able to demonstrate honesty and integrity in both their professional and personal lives, and failure to do so may have severe consequences.

There had been public outcry when it was revealed in the press earlier in the year that an unnamed "fund manager" was Britain's biggest rail-fare dodger. Anxious to avoid criminal prosecution and to keep his identity secret, the individual (later revealed by the press to be Mr Burrows) reached an out of court settlement with rail operator Southeastern and paid, within three days, the £42,550 of rail fares he had illegally avoided together with £450 of Southeastern's legal costs. At the time, the existence of the settlement caused widespread fury that poorer rail fare dodgers were being prosecuted for theft, leaving them with a criminal record, whereas a wealthy fund manager had escaped prosecution with his identity protected and reputation intact.

Upon learning of the case and the settlement, the press, British Transport Police and the FCA began investigating to discover the identity of the fare dodger - the FCA's interest driven by the revelation that the individual worked in the financial services industry as an "approved person" (someone who performs a controlled function for an authorised firm).

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