Legal Representation for FSA Approved Persons in Internal Investigations

Internal Investigations

24.02.2010

The recent case of Kulkarni v Milton Keynes Hospital NHS Trust suggested that public sector employees may have the right to be accompanied by a lawyer at a disciplinary hearing if the resulting decision could lead to career-long losses.  However, will this ruling also apply to FSA approved persons?

As yet, the extent to which Financial Services Authority regulated or approved employees may be entitled to legal representation in disciplinary meetings is untested.

Dismissals in these contexts often involve allegations of criminal conduct, market abuse and/or serious FSA principle or rule breaches.  There is a close connection arises between an employer-led internal investigation and subsequent disciplinary process, and the FSA individual approvals process (if applying to be an approved person with a new employer) and a possible FSA investigation.

The removal of 'approved person' status on the FSA register, together with dismissal for gross misconduct and the subsequent filing of a 'form D' by the employer with the FSA, can have career ending consequences for the aggrieved employee. The outcome of any FSA Enforcement & Financial Crime Division investigation could lead to sanctions such as fines and/or a full or partial prohibition from working in the financial services industry or at worst lead to a criminal investigation or prosecution by the FSA or another prosecution agency such as the SFO or CPS.

Moreover, these employees are often highly paid and have the means (and will) to litigate. We are aware of circumstances where City institutions have been persuaded to permit solicitors to attend disciplinary hearings.

Sarah Wallace, partner in the Regulatory & Criminal Investigations team says:

"It is essential that any FSA approved person who faces or is at risk of an internal investigation and/or disciplinary hearing seeks independent legal advice from both an FSA criminal and/or regulatory investigation legal expert as well as from an employment lawyer.  And it is very important that legal advice is sought before voluntarily attending any informal or formal interview with an employer.  The reason for seeking both FSA regulatory and employment law advice is to ensure that an employee's position is not prejudiced in either the employment disciplinary process or prejudiced in any subsequent FSA approvals enquiry, FSA Enforcement investigation or at worst a criminal investigation.  Anything said by an employee to an employer in an internal investigation and/or disciplinary process could be used as evidence against them in an FSA regulatory or criminal investigation or as evidence when applying to be re-approved with the FSA."

Please see out website for further information on Employment Law or Regulatory & Criminal Investigations or speak to Sarah Wallace or John Hayes.