FCA-regulated employee fairly dismissed for not being a “fit and proper person” after misleading employment tribunal


3 mins

Posted on 30 Apr 2019

An FCA-regulated firm was entitled to dismiss an employee for not being a “fit and proper person” after an employment tribunal ruled he lacked credibility when giving evidence.  

Facts

In Radia v Jefferies International Limited, Mr Radia brought a disability discrimination claim against his employer which he lost.  The employment tribunal found that he had misled the tribunal about certain matters when giving evidence.  It indicated that this was of “grave concern” as he was a regulated person.   

When the employer received the employment tribunal’s judgment, it suspended Mr Radia.  It arranged a disciplinary hearing and gave him an opportunity to put his side.  It relied on the  tribunal’s adverse findings about his credibility to conclude that he was not a fit and proper person in accordance with the FCA Handbook.  It dismissed him on this basis. 

The fit and proper test is a benchmark used by the FCA to assess whether individuals are suitable to perform a controlled function. When considering an individual’s fitness and propriety, the FCA considers honesty (including openness with self-disclosures, integrity and reputation), competence and capability and financial soundness. Guidance provided in the FCA Handbook (FIT 2.1.3) provides that when assessing fitness and propriety, relevant matters include whether the person has been criticised by a court or tribunal (whether publicly or privately).  

Mr Radia brought a number of claims, including one for unfair dismissal but the employment tribunal rejected his claims and he appealed to the Employment Appeal Tribunal (EAT).     

Decision 

Mr Radia argued that his employer should not have relied on the tribunal’s findings about his credibility and instead should have carried out its own investigation.  The Employment Appeal Tribunal disagreed.  Whilst it may have been better if the employer had carried out its own investigation, the test was whether the procedure the employer adopted was within the band of reasonable responses.  It had been open to the tribunal to find that there was no further investigation which the employer could reasonably have been required to conduct before it heard from Mr Radia, as the findings spoke for themselves.   

Implications 

An employer considering disciplining an employee should normally carry out its own investigation before deciding whether to proceed with disciplinary charges and hold a disciplinary hearing.  The Acas Code of Practice on disciplinary and grievance procedures requires this.  Where an employer fails to follow the Acas Code this is something which an employment tribunal can take into account when assessing the fairness of the dismissal.  This was an unusual case where the tribunal concluded that the employer could rely on the employment tribunal’s conclusions without carrying out its own investigation.

FCA-regulated employees need to be aware that the “fitness and propriety test” is broad in its reach.  Employers are not confined to considering an employee’s behaviour at work and should consider additional factors, such as criticism by a court.  FCA-regulated firms that are already within scope of the Senior Managers & Certification Regime should take note of this decision when assessing individuals’ fitness and propriety. The decision will also be of interest for FCA solo-regulated firms currently preparing for the extension to them of the Senior Managers & Certification Regime on 9 December 2019. 

The articles published on this website, current at the date of publication, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your own circumstances should always be sought separately before taking any action.

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