Case Preview: R v Rollins, R v McInerney
08 Thursday Jul 2010
This appeal is listed before a seven justice Supreme Court (including the Lord Chief Justice, Lord Judge) on 12-13 July 2010. The Court will decide the important issue of the scope of the Financial Services Authority’s (FSA) powers to prosecute offences other than those contained in the Financial Services & Markets Act 2000 (FSMA). The decision appealed from is  EWCA Crim 1941.
The appellants have been charged with money laundering offences under sections 327-8 of the Proceeds of Crime Act 2002. They contend that the FSA’s powers to prosecute are exclusively defined by sections 401-2 FSMA, which do not expressly confer a power to prosecute for the money laundering offences in question. The FSA, although it has public functions, is also a private company limited by guarantee.
The FSA contends that it had brought the prosecutions in question as private prosecutions, even though it had not made any contemporaneous statement or disclosure to the Appellants to that effect. The Court of Appeal (Criminal Division) held that there was nothing in s.401-2 FSMA which restricted the FSA’s powers to prosecute to the offences specified therein and that Parliament’s intention had not been to cut down the FSA’s functions or powers in the way contended for. It also held that the FSA had a general power of private prosecution under s.6 of the Prosecution of Offences Act 1985 and that its non-disclosure of the private nature of the prosecutions was not material. The only guidance issued by the FSA itself as to the use of its own powers in this regard is contained in the FSA’s Enforcement Guide at [12.1]:
“The FSA may also prosecute criminal offences for which it is not the statutory prosecutor, but where the offences form part of the same criminality as the offences it is prosecuting under the Act.”
The notion that the FSA can bring private prosecutions (for any offence, let alone those not contained in FSMA) is highly controversial: the concept was described by Sir Anthony May PQBD as involving “a large degree of unreality” in R(Uberoi) v City of Westminster Magistrates’ Court & FSA  1 WLR 1905. In that case, the FSA’s power to prosecute for offences of insider dealing (contained in Part V of the Criminal Justice Act 2003) was upheld (the primary argument being directed to whether it was mandatory for the FSA to obtain the DPP’s consent to prosecute for insider dealing) and the private prosecution point was ultimately left open.
The appeal has widespread implications and raises serious ancillary issues. If the FSA’s power to prosecute for non-FSMA offences is upheld by the Supreme Court then the FSA will not be bound by the CPS Code for Crown Prosecutors as regards those offences. Also, it is not at all clear exactly what resources the FSA are deploying when it prosecutes such offences. Is it using any of its public funds? Is it proper to do so when it is not acting as a statutory prosecutor? Is it proper for it to use industry fees it levies from supervising regulated firms to fund such prosecutions? And what about the legality of the basis on which it has acquired the material which is being used to prosecute privately? If the FSA is actually two prosecutors rolled into one then can it lawfully pass, for example, material obtained using its compulsory powers of investigation (e.g. compelled interviews) to be deployed in a private prosecution? In Shannon v UK (2006) 42 EHRR 41 the ECtHR held that the passing of compulsorily obtained material to a separate prosecutor (or the police) violated Article 6, despite the existence of statutory safeguards concerning the use of such material at trial. In Scopelight Ltd. v FACT  2 WLR 1138 the Court of Appeal (Civil Division) held that material obtained by the police could lawfully be passed to a private prosecutor but Shannon was not cited. Scopelight, however, were refused permission to appeal to the UKSC.
The appeal also needs to be viewed in the broader context of the so-called ‘regulators turf war’ in which the SFO, FSA, CPS and OFT currently have separate spheres of influence but possibly overlapping jurisdiction. The Chancellor’s announcement in his Mansion House speech of the new government’s intention to form a single Economic Crime Agency (ECA) in which the prosecutorial functions of the SFO, FSA and OFT would be merged forms an ominous backdrop against which this appeal will be heard. Interestingly, after the announcement of the ECA’s creation, the FSA swiftly responded by stating that it wished to retain the power to prosecute offences of insider dealing (in its new guise as the Consumer Protection & Markets Authority), rather than giving the ECA that power.
Alex Bailin QC, Matrix