In this case, the FCA refused a firm’s application for permission to carry on the regulated activities of debt adjusting and debt counselling under Part 4A of the Financial Services and Markets Act (2000) (FSMA). The applicant referred the matter to the tribunal arguing that, contrary to the FCA’s view, the giving of the decision notice did not have the effect of terminating its interim permission as a consequence of the operation of article 56 of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No 2) Order 2013.
If the applicant was correct, then it could carry on the business covered by its interim permission until its reference was determined. However, if the FCA was correct, the applicant’s right to carry on its business would cease with the giving of the decision notice as a consequence of the operation of article 58 of the Order. In that case, the only way the applicant could continue to carry on its business would be if the tribunal made a direction suspending the effect of the decision notice pending termination of the reference under rule 5(5) of the Tribunal Procedure (Upper Tribunal) Rules 2008.
The applicant also made an application (a suspension application) under the Upper Tribunal Rules in case it was unsuccessful regarding interpretation of the provisions of the Order. To ensure there was no gap between termination of the interim permission and a hearing of the suspension application, the applicant applied to the tribunal, with the FCA’s consent, for a direction to be made under rule 5(5) to cover the limited period between the date of the decision notice and the determination of the suspension application. The FCA only gave its consent on the basis that the applicant agreed voluntarily to vary its permission to carry on no regulated activity while the direction remained in force. The tribunal gave a direction under rule 5(5), however, it separately made a decision on 28 January 2016 dismissing the suspension application.
The tribunal concluded that the correct construction of article 58(3)(c) of the Order is that the applicant’s interim permission ceased to have effect when the decision notice was given in respect of the applicant’s application for a Part 4A permission. The tribunal commented that it would not be immediately obvious that the rule 5(5) process can mitigate the effects of article 58. As a result, it recommended that, where the FCA proposes to refuse a Part 4A permission application made by a firm that has an interim permission, the warning notice and any decision notice should make reference to that process, so the firm concerned can take steps to preserve the effect of the interim permission pending any application to the tribunal under rule 5(5).