In the recent case of Secretary of State for Business, Innovation and Skills v Aaron and Ors, the Secretary of State succeeded with an application to disqualify two directors of a regulated company that provided investment services and which stood accused of mis-selling Structured Capital at Risk Products, commonly called SCARPS. The Secretary of State successfully argued that by breaching FSA rules the directors had failed to exercise the reasonable skill and care expected from directors in managing a company.
The directors argued that disqualification would be unfair as breaches of the FSA rules were not fundamental to their wider ability to manage a company and that disqualification would restrict their ability to work as a director with any company in the future. The court rejected this argument saying that the failure to concern themselves with their relevant responsibilities was a "grass roots failing" and was sufficient to disqualify them from the management of any company.
The court also accepted the argument that, in the case of a FSA authorised company, a director's duty to that company to exercise reasonable care, skill and diligence extends to taking all reasonable steps to ensure that the company complies with its regulatory obligations.