6th July 2020
In FCA v Avacade  EWHC 1673 (Ch) the High Court considered several points important for the financial services sector (particularly for unregulated entities), practitioners, and the regulator. Kajetan Wandowicz has written an analysis of the judgment for LexisNexis PSL.
The Defendants purported to outline to their customers the options available to them for dealing with their pension funds, but in reality, through the use of leading questions and veiled suggestions, they steered the customer to a supposedly independent decision to transfer their pension into a SIPP, and invest in certain alternative investments promoted by the Defendants. The court found that by leading customers to their promoted schemes, the Defendants made arrangements with a view to a person buying or selling investments, thus breaching the general prohibition contained in s.19 FSMA.
The four most notable points arising from the judgment are that:
Establishing a direct contravention of s.89 FSA (which prohibits knowingly or recklessly making false or misleading statements in the course of promoting financial services) by a corporate defendant is not straightforward, because it is likely to depend on the exact statement being approved by the directing mind(s) behind the company.
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