Markou v Financial Conduct Authority [2024] EWCA Civ 1575 (17 December 2024)

Markou v Financial Conduct Authority [2024] EWCA Civ 1575 (17 December 2024)

Mr Markou, as CEO and sole director of FSE, knowingly allowed the company to carry on regulated mortgage business without professional indemnity insurance, failed to implement adequate controls or supervision, and gave instructions that encouraged ongoing regulated activity despite the absence of insurance. His conduct was reckless and demonstrated a lack of integrity required of a senior manager in a regulated entity. The Upper Tribunal erred in law and fact by exonerating him, misapplying the test for recklessness, and failing to appreciate the regulatory risk and Mr Markou's knowledge.

Citation
[2024] EWCA Civ 1575
Parties
Applicant/respondent: Mr Markos Markou; Respondent/appellant: The Financial Conduct Authority
Jurisdiction
England and Wales
Judgment Date
17 December 2024
Procedural Posture
Regulatory Appeal (financial Services) / Appeal From Upper Tribunal (tax and Chancery Chamber) to Court of Appeal
Outcome
Appeal allowed in part; Upper Tribunal's exoneration of Mr Markou overturned.
Legal Topics
Professional Indemnity Insurance, Regulatory Compliance, Recklessness, Integrity of Approved Persons, Financial Services and Markets Act 2000, Tribunal Jurisdiction
Financial Regulation Administrative Law Professional Indemnity Insurance Regulatory Compliance Recklessness Integrity of Approved Persons Financial Services and Markets Act 2000 Tribunal Jurisdiction

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Parties

Mr Markos Markou

Applicant/respondent

The Financial Conduct Authority

Respondent/appellant

Procedural Posture

Regulatory Appeal (financial Services) / Appeal From Upper Tribunal (tax and Chancery Chamber) to Court of Appeal

Legal Issues

  1. 1 Whether Mr Markou acted recklessly in allowing FSE to conduct regulated mortgage business without professional indemnity insurance (PII)
  2. 2 Whether Mr Markou's conduct demonstrated a lack of integrity under Statement of Principle 1
  3. 3 Whether the Upper Tribunal erred in law and fact in exonerating Mr Markou from recklessness and lack of integrity

Ratio Decidendi

Mr Markou, as CEO and sole director of FSE, knowingly allowed the company to carry on regulated mortgage business without professional indemnity insurance, failed to implement adequate controls or supervision, and gave instructions that encouraged ongoing regulated activity despite the absence of insurance. His conduct was reckless and demonstrated a lack of integrity required of a senior manager in a regulated entity. The Upper Tribunal erred in law and fact by exonerating him, misapplying the test for recklessness, and failing to appreciate the regulatory risk and Mr Markou's knowledge.

Court Disposition

Appeal allowed in part; Upper Tribunal's exoneration of Mr Markou overturned.

Orders

  • Finding of recklessness and lack of integrity against Mr Markou restored.
  • Matter remitted to FCA for reconsideration of appropriate enforcement or supervisory action in light of Court of Appeal's findings.