THE UK’s financial watchdog has lost a key test of its powers to punish bankers for alleged supervision failures after a fine on a senior UBS banker was overturned yesterday.
In a rare successful appeal against a fine imposed by the regulator, John Pottage was cleared of misconduct by the Upper Tribunal over compliance failings that occurred under his supervision at UBS’s British wealth management business, which he ran.
The Financial Services Authority (FSA) had sought to fine him £100,000 for alleged failings as the unit’s boss, even though he was not personally involved in the compliance issues.
“We think that the actions that Mr Pottage in fact took prior to July 2007 to deal with the operational and compliance issues as they arose were reasonable steps,” the Upper Tribunal said in its ruling.
The FSA said it accepted the decision, but was undeterred from pursuing disciplinary action against senior management.
“We have always recognised that pursuing disciplinary action against senior management in large firms is very challenging,” said Tracey McDermott, acting director of enforcement and financial crime at the FSA. “But we also believe strongly that senior management must take responsibility for the businesses they run.”
The case has been watched by rival banks as a potential precedent-setter in terms of how far up the ranks responsibility for failings can go.
Although wins against the FSA are rare, other senior bankers are following this route. JP Morgan dealmaker Ian Hannam was fined £450,000 for market abuse in early April, a punishment he is appealing.