Last year’s high-profile fall from grace of former BlackRock employee Jonathan Burrows should be a lesson to all financial professionals. Acting dishonestly, or with a lack of integrity, can have wide-reaching consequences – even if the events in question occur entirely in your private life.
Initially, it seems that Burrows hoped his misdemeanour would remain anonymous. When it was first reported that a “City executive” had narrowly avoided prosecution by repaying £43k of unpaid train fares accumulated as a result of travelling from East Sussex to London over a five-year period, his name was not mentioned. It was not long, however, before he was unmasked in the press, suspended by BlackRock, and had resigned from his highly paid job. Worst of all, in the final weeks of 2014, the Financial Conduct Authority (FCA) prohibited Burrows from performing any role which requires approved person status. This will have a devastating effect on his career in the City. It should also be a lesson to other approved persons in London – the FCA is looking at your behaviour, both within work and without.
In its own words, the FCA says it barred Burrows to protect consumers and to protect and enhance the integrity of the UK financial system. ‘Public interest’ was a significant factor in the FCA’s decision making process. Some may feel that this sanction is harsh: Burrows settled the matter with the train operator, more than paid-off all outstanding fines, made full admissions to Southeastern Trains and the FCA and apologised and settled with the FCA at the earliest opportunity. In the FCA’s eyes, none of this seems to have made a difference.
This is reportedly only the second time that the FCA has prohibited an approved person for a non-work related offence. However, Burrows’ sanction is unlikely to be the last of its kind. Globally, regulators are putting more emphasis on integrity. The FCA is simply consistent with that trend.
Burrows’ story provides a salutary reminder of the potential impact of misconduct perpetrated by finance professionals, whether in their business lives or in their personal lives. The need to act with honesty and integrity underpins the code of conduct for most professions, law included. However, the tests for impropriety vary. The FCA evaluates honesty, integrity and reputation under its ‘fit and proper’ test. As Burrows’ case illustrates, that test applies not just to the professional sphere.
Transparency is vital in demonstrating honesty and integrity. If you’re concerned about an episode in your past, providing a balanced explanation of events may assist the regulator in establishing the seriousness of a transgression, and whether the conduct should prevent you from practising in your chosen profession. Each case will be considered on its own merits; past indiscretions do not necessarily demonstrate an inherent lack of honesty and integrity. Regulators will, however, take a dim view of a failure to disclose relevant information when sought, as this may compound any suggestion of an individual demonstrating a lack of integrity.
Julie Matheson is a partner in the regulatory and professional discipline team of law firm Kingsley Napley LLP.