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Beware what you say in court...

  • United Kingdom
  • Employment law
  • Financial institutions

25-04-2019

Background: fitness and propriety  

Rule 2.1.3G (10) of the FIT guidance in the FCA Handbook states that when assessing honesty, integrity and reputation for the purposes of a fitness and propriety assessment, an employer should have regard to circumstances where the person has been censured or criticised by a court or tribunal.

In Radia v Jefferies International Limited, the EAT ruled that Jefferies International (Jefferies), which is regulated by the FCA, was entitled to dismiss Mr Radia (its managing director and a regulated person) as a result of the ET’s criticisms of his credibility. 

The Facts 

Mr Radia had brought a claim for disability discrimination against his employer, Jefferies. Dismissing his claim, the employment tribunal (ET1) made findings that Mr Radia had:

  • Been untruthful about his weight on his discharge from hospital
  • Been misleading when giving evidence about his holiday in Mexico (which he claimed he had been forced to miss)
  • Given untruthful evidence (a ‘considerable exaggeration’) about the length of absence for a knee injury
  • Given untruthful evidence about when he found out that he was disabled.

ET1 also noted that Mr Radia’s behaviour as a regulated person ‘would be a matter of grave concern’.

Mr Radia then brought a second claim for victimisation. At this point, the ET1 sent its judgment to the parties, leading to Mr Radia’s dismissal for gross misconduct as a  result of the ET1’s credibility findings, which prompted Jefferies to conclude that Mr Radia was not a fit and proper person within the meaning in the FCA Handbook.

Mr Radia’s further claim was then considered by the second employment tribunal (ET2). The ET2 found that, given that Jefferies’ belief in Mr Radia’s misconduct was based on the ET1’s findings, any investigation that could be carried out was limited. Jefferies gave Mr Radia the opportunity to explain and to put forward his point of view at a disciplinary hearing and put the ET1’s findings into context. In the circumstances, this was a reasonable investigation.

Mr Radia appealed. 

The EAT decision 

The EAT noted that the ET1 had not used words such as ‘dishonest’ or ‘lie’ but that this did not really help Mr Radia. The ET1 had found that his evidence was not credible in many respects and further that such finding was of grave concern because Mr Radia was a regulated person. Those findings on any level were very damaging to Mr Radia whether or not they amounted to findings of deliberate dishonesty. It was open to the ET2 to find that Jefferies had acted reasonably in treating the ET1’s reasons as a starting point without further investigation at that stage and then seeking Mr Radia’s representations. While there was some criticism about the combining of the investigation and disciplinary process, the process was within the range of reasonable responses.

The EAT held that it was open to the ET2 to find that there was no further investigation that Jefferies could have carried out before it sought response from Mr Radia, as the findings spoke for themselves. 

This case serves as a useful reminder of the importance of high standards of conduct and honesty and the dangers to a regulated person of pursuing misconceived litigation. Employers would be wise to separate out the investigation and disciplinary processes, given the criticism in this case but this is a helpful example of how an employer can rely on a regulated person’s conduct in court or tribunal when considering fitness and propriety.  

You can read the case here

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