FCA v Macris: A new test for “identification” in FCA notices

Published on 28th Mar 2017

The Supreme Court’s new test to determine if third parties are “identified” in FCA notices significantly raises the threshold, rejecting the approach taken by either the Upper Tribunal or the Court of Appeal.  Its pragmatic “dictionary” interpretation will favour regulatory efficiency over third party protection, but may lead to real prejudice in future cases. 

On 22 March 2017, the Supreme Court handed down a short judgment on the proper interpretation of “identifies” in section 393 of the Financial Services and Markets Act 2000.  Section 393 provides that, if an FCA warning or decision notice “identifies”, prejudicially, an individual who is not the subject of the notice, that individual must be given the opportunity to respond to the criticisms made, before the notice is made public. As prejudicial comments by the FCA can cause significant, potentially irreparable, reputational damage to individuals, section 393 is intended to allow individuals to defend themselves before criticisms are made public.


In September 2013, the FCA fined JP Morgan Chase Bank NA £137.6m in respect of losses arising out of its Synthetic Credit Portfolio (the so-call “London Whale” trades).  The Bank had incurred losses of $6.2bn from high-risk trading, and during the period in which these losses were being incurred the Bank had withheld information from the FCA, and may have actively misled the regulator.

Following a settlement with the Bank, the FCA published its Final Notice (and Decision Notice) on 19 September 2013.  Mr Macris, no longer employed by JP Morgan, saw those public notices and claimed that adverse references to “CIO London management” in those documents identified him personally. As he had not had the opportunity to exercise his section 393 rights, he referred the matter to the Upper Tribunal.

The Upper Tribunal and Court of Appeal decisions

In considering the preliminary issue of whether Mr Macris had been “identified” for the purposes of section 393, the Upper Tribunal asked itself:

  • whether references to “CIO London management” identify an individual, solely by reference to the Notice itself; and, if so
  • could the references be regarded as referring to anyone other than Mr Macris?

The Tribunal held that Mr Macris had been “identified” on this basis, noting that the “reference to CIO London management, being the most senior level of management, [was] significant. A reader with experience of how large corporations operate would take such a reference as being to the most senior individual concerned“.

On appeal by the FCA, the Court of Appeal maintained that “CIO London management” was a reference to “an individual, ascertained by reference solely to the terms of the notice itself” and that, from publically available material, persons who “operated in his area of the financial services industry, would reasonably have been able to identify Mr Macris” from the notices.  That approach was subsequently adopted by the Upper Tribunal in Bittar v FCA: there it was held that Mr Bittar’s counterparties in other leading banks, and customers of his business unit, were the appropriate standard of readers who would identify Mr Bittar from that notice.

The Supreme Court’s new approach

The Supreme Court judgment overhauled those decisions.

Giving the leading judgment, Lord Sumption took a restrictive approach to section 393, noting that the person must be “identified” not merely “identifiable” in the Notice to qualify for protection.  For section 393 to apply:

  • the notice must identify the individual by name or by a synonym for him, such as his or her office or job title, such that it must be apparent from the notice itself that the relevant reference could apply only to one person; and
  • that one person must be identifiable by the general public from the notice itself. The notice could be interpreted by publically available information if necessary (for example, reference to the “chief executive” of X Company would identify that individual, as the company’s website could easily be used to obtain the name of the relevant individual). This did not mean the notice could be supplemented by obscure publically available information  or, for example, digging around and putting a number of facts in the public domain together to reveal the identity of the individual referred to – by what Lord Neuberger referred to as “jigsaw identification”).

The Supreme Court thus rejected the more specific class of potential readers adopted by the Court of Appeal.  Indeed, the class of reader was broader even than that requested by the FCA in its submissions.

Agreeing with Lord Sumption (with whom Lord Hodge also agreed), Lord Neuberger added that “a test that was satisfied by reference to a specific and smaller group would give rise to difficulties as to where one should draw the line as a matter of principle“.

This is a troubling basis for the judgment: the Supreme Court’s decision will have the effect of restricting individuals’ rights, on the basis that it might be “difficult” for the regulator to know whether the notice may identify an individual to a slightly narrower category  of people than the general public at large.

The dissenting view

Reflecting the strong arguments on both sides, the Supreme Court’s decision was not unanimous. Lord Wilson (dissenting) and Lord Mance (albeit agreeing with the majority on the facts) did not, for example, view any difficulty for the FCA as being a sufficient reason to adopt a narrower test.

Instead, Lords Wilson and Mance would have broadened that test because of the potential for unfairness to individuals by narrowing the test.  This was particularly so given that it is the reaction to the criticism in an FCA notice by those who operate in the same sector of the market which is likely to cause the relevant person the most damage.  The question to be answered, according to Lord Wilson, should be “Are the words in the notice such as would reasonably lead an operator in the same sector of the market who is not personally acquainted with the applicant, by reference only to information in the public domain to which he would have ready access, to conclude that the individual referred to in the notice is the applicant“.


With respect to the majority, in our view this is a harsh decision and one that will unduly affect the rights of individuals in the financial services sector.  Whilst Lord Sumption is right that regulatory notices are published to the public at large, it is hard to see many outside those operating within the financial sector having much interest in their contents.  It is those within the financial sector that are more likely to have access to additional information enabling them to identify one of their peers and it is equally in the eyes of those that an individual will suffer the most damage if they are wrongly connected to allegations of wrong-doing. Lord Wilson’s formulation, in our view, would have been a more sensible and still workable test.

But we have the eagerly awaited clarity from the highest court of the land and we have to live with it.  Nevertheless, we would hope that, irrespective of the adjudged legal meaning of section 393, the FCA will exercise caution before referring prejudicially to an individual in a regulatory notice.  Fairness would dictate that they are given the opportunity to defend themselves in circumstances where, whilst not identifiable to the man on the Clapham Omnibus, the relevant individual would easily be identifiable by those in the City of London.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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