Jon Frensham v The Financial Conduct Authority [2021] UKUT 0222 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Judge Timothy Herrington,Member Catherine Farquharson,Member Michael Hanson |
| Neutral Citation | [2021] UKUT 0222 (TCC) |
| Subject Matter | 31 August 2021 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 31 August 2021 |
[2021] UKUT 0222 (TCC)
Appeal number: UT/2020/000210
FINANCIAL SERVICES– independent financial adviser convicted of
attempted sexual grooming of a child aged under 16 – whether adviser no
longer fit and proper by reason of lacking the necessary integrity and
reputation – whether decision to remove approval to perform senior
management functions and impose a prohibition order reasonably open to
the Authority - ss56, 63 & 133(6) FSMA 2000
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
JON FRENSHAM
Applicant
- and -
THE FINANCIAL CONDUCT AUTHORITY
The
Authority
TRIBUNAL:
Judge Timothy Herrington
Member Catherine Farquharson
Member Michael Hanson
Sitting in public at the Rolls Building, Fetter Lane, London EC4A 1NL on 14
and 15 June 2021
Emmanuel Sheppard, Counsel, instructed by Signature Litigation LLP,
Solicitors, for the Applicant
Sarah Clarke QC, instructed by the Financial Conduct Authority, for the
Authority
© CROWN COPYRIGHT 2021
2
DECISION
Introduction and decision referred
1. This decision concerns a reference by Mr Jon Frensham (“Mr Frensham”) of a
decision notice of The Financial Conduct Authority (the “Authority”) dated 1 October
2020 (the “Decision Notice”).
2. Pursuant to the Decision Notice the Authority decided to withdraw Mr
Frensham’s current approval pursuant to s 63 of the Financial Services and Markets
Act 2000 (“FSMA”) and make an order prohibiting him from performing any function
in relation to any regulated activity carried on by an authorised person, or by an
exempt person or exempt professional firm, in respect of any regulated activity
pursuant to s 56 FSMA.
3. The basis for the Decision Notice was the Authority’s view that Mr Frensham
was not a fit and proper person to perform a function in relation to any regulated
activity due to the fact that on 10 March 2017 he was convicted by a jury under
section 1(1) of the Criminal Attempts Act 1981 for attempting to meet a child under
the age of 16, following acts of sexual grooming contrary to section 15 of the Sexual
Offences Act 2003. On 27 March 2017 Mr Frensham was sentenced to 22 months’
imprisonment, suspended for 18 months with a 60 day rehabilitation requirement. He
was made the subject of an indefinite Sexual Harm Protection Order (“SHPO”) and
added to the sex offenders register until 2027. These events occurred when Mr
Frensham was an approved person.
4. The Authority contends that the nature and circumstances of Mr Frensham’s
offending show that he lacks integrity. It says that the Applicant sought to exploit a
child for his own sexual gratification and at the time of committing the offence he was
also in breach of pre-existing bail conditions. Consequently, the Authority contends
that Mr Frensham’s offending involved attempted exploitation of a minor, and abuse
of a position of trust and a deliberate and criminal disregard for appropriate standards
of behaviour.
5. In addition, the Authority contends that in order to maintain public confidence
in the financial services industry, the Authority and the public are entitled to expect
that approved persons and financial advisers are individuals with integrity and good
reputation. Even though Mr Frensham’s offence was not committed at work and did
not involve financial dishonesty, it involved him deviating from legal and ethical
standards and seeking to exploit those more vulnerable than himself, which the
Authority considers is fundamentally incompatible with his role as a financial adviser.
The Authority also considers that there is a risk of erosion of public confidence if
individuals who committed such misconduct and do not have the requisite reputation
are permitted to continue working in the financial services industry.
6. Furthermore, the Authority considers that Mr Frensham has not been open and
transparent with it because he did not inform the Authority of a number of matters.
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The matters on which the Authority relies in this respect include (i) Mr Frensham’s
earlier arrest in March 2016 which led to bail conditions being imposed (ii) his arrest
and remand in custody in respect of the offence which led to his conviction (iii) his
failure to tell the Authority that, whilst on remand, he was not for five weeks in a
position to discharge his controlled functions or ensure compliance by the firm of
which he was the sole approved person with its regulatory obligations and (iv) his
failure to inform the Authority of the decision of the Chartered Insurance Institute
(“CII”) to refuse to renew his Statement of Professional Standing and its decision to
expel him from membership.
7. Mr Frensham contends that the Authority has wrongly applied the fitness and
properness test to the facts. In particular, Mr Frensham contends that the Authority
allowed irrelevant considerations to affect its judgment and did not have sufficient or
any regard to relevant factors. Among those factors are (i) Mr Frensham’s conviction
did not relate to his regulated activity (ii) the conviction was not for an offence of
dishonesty and (iii) there are no indirect connections between the criminal offence and
Mr Frensham’s regulated activity, the criminal offence not being committed at Mr
Frensham’s place of work, and his work is not likely to bring him into contact with a
minor or put him at risk of breaching the conditions of his SHPO. Further, Mr
Frensham contends that the Authority erred in its findings of a lack of candour on Mr
Frensham’s part in relation to the matters referred to at [6] above
8. Mr Frensham says he is deeply remorseful for the actions which led to his
conviction. He contends that a prohibition order is wholly disproportionate and should
not be applied in circumstances where there has been no dishonesty finding in relation
to conduct which, whilst very serious, took place outside the professional sphere. Mr
Frensham contends that the Authority has not sufficiently explained why the criminal
conviction in this case indicates unfitness and has not paid sufficient regard to the
length of time since the occurrence of any matters indicating unfitness or the severity
of the risk which Mr Frensham poses to consumers and confidence in the financial
system.
9. This is the first time that the Tribunal has had to consider a case where the
Authority is seeking a prohibition order against an individual based on that
individual’s conviction for a criminal offence not involving dishonesty in
circumstances where the behaviour concerned was unrelated to the individual’s
regulated activity.
10. We have decided to dismiss Mr Frensham’s reference, and we now set out the
reasons for our conclusions.
11. We are grateful to both Counsel for their very clear and comprehensive
submissions. We are particularly grateful to Mr Sheppard and his instructing
solicitors, Signature Litigation LLP, who acted pro bono for Mr Frensham thus
enabling the important issues raised by this case to be fully argued.
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