Employment Appeal Tribunal Provides Guidance On The FCA's ‘Fit And Proper Person' Test

In Radia v Jeffries International Limited, UKEAT/0123/18 the Employment Appeal Tribunal (“EAT”) held that an employer, Jeffries International Limited (“Jeffries”), properly dismissesd an employee where Jeffries considered that the employee fell short of the Financial Conduct Authority's (“FCA”) 'fit and proper person' requirements that are set out in the FCA Handbook.

Background

In an earlier decision, the Employment Tribunal (“ET”) had dismissed the employee's disability discrimination case, finding that his evidence was 'not credible in many respects', including some evidence that the ET described as 'clearly an untruth'. Furthermore, he had 'misled' the ET, which was of 'grave concern' given that the employee was an FCA regulated individual.

Jeffries then went on to dismiss the employee, who was an 'approved person' under the FCA rules, alleging that his behaviour 'was not compatible with his being a fit and proper person for the purposes of the FCA rules'. The firm relied on the ET's findings rather than conducting its own further investigations into the employee's misconduct.

Fit and proper person test

The FCA will only allow a person to be authorised as an 'approved person' to perform an FCA controlled function within a firm if they are a 'fit and proper person' for that role.

SUP10A of the FCA Handbook directs firms to the FIT section of the Handbook (Fit and Proper test for Employees and Senior Personnel Sourcebook) for further guidance on the criteria.

FIT details the most important considerations to be someone's:

Honesty, integrity and reputation; Competence and capability; and Financial soundness. FIT also applies to firms subject to the Senior Managers and Certification Regime (“SM&CR”). For these firms, there is also a continuing obligation on firms to ensure that approved persons continue to be fit and proper.

Specifically relevant to this case is the Guidance at FIT 2.1.3G (10), which says that the FCA can take into account whether a person has been publically or privately criticised by a court or tribunal when assessing whether that...