28/03/2024Updates to the Financial Promotion Order for HNWIs and SCSIs
This piece contains a summary of the changes to be brought about by the… Read more
04/05/2020
It is difficult to know for sure, but the Covid19 Lockdown seems to have coincided with (perhaps even precipitated) a lot more supervisory and investigative activity by the Financial Conduct Authority (“FCA”). Clients in the regulated sector seem far likelier these days to be served with a notice under s165 FSMA 2000 – a device FCA uses to compel disclosure of just about anything the regulated firm holds (on pain of contempt of court!). Time as was, FCA would just request a relatively friendly supervision visit to the firm and collect information through the means of a follow-up report. Perhaps because firms cannot be visited in the Lockdown, the Regulator is using this power instead. And the tendency seems to be to ask for as much as could conceivably be used in a review, rather than focusing on what may actually be useful.
The question is always one of what to disclose. And if the FCA has an issue with the way an ostensibly well-run firm has conducted itself, it is likely that the firm has received legal advice and acted upon it – even if FCA takes issue with the result.
So we need to consider the matter of legal professional privilege here, to prevent the firm from being tempted to disclose material it can and should hold back.
LPP has its origins in 16th century case law, although the first (relatively) modern statement dates from the 1830 case of Greenough v Gaskell. The principle is that where a client is legally advised by his solicitor, the document that sets out that advice is subject to LPP. This means that the lawyer cannot be made to disclose it without his client’s consent. But a series of other important points follow from this:
In summary, if the FCA is imposing its supervisory will and calling on you to deliver up all manner of material to satisfy a s165 notice or an enforcement case, you must take legal advice and you must carefully consider the matter of LPP, which is there for your protection.
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