The FCA has recently indicated that it intends to severely cut back on the number of redress schemes so this case may be one of the last assuming that the FCA succeeds before the Supreme Court. Bluecrest is appealing the decision of the Court of Appeal . The background is as follows;
In December 2021, the Financial Conduct Authority (FCA) exercised its powers under section 55L of the Financial Services and Markets Act 2000 (FSMA) to impose a £40.8 million financial penalty on BlueCrest Capital Management (UK) LLP (BCMUK) and mandated the firm to provide an estimated $700 million in redress to its investors. This action stemmed from BCMUK’s failure to adequately manage conflicts of interest, leading to substandard service for its clients.

BCMUK challenged the FCA’s decision, particularly contesting the FCA’s authority to impose a redress requirement under section 55L FSMA. The firm argued that such a power was constrained by section 404F(7) FSMA, which outlines specific conditions for establishing industry-wide redress schemes.

Initially, the Upper Tribunal sided with BCMUK, interpreting that the FCA’s power to enforce a redress requirement on a single firm under section 55L FSMA was indeed limited by the conditions specified in section 404F(7). However, upon appeal, the Court of Appeal reversed this decision in October 2024. The Court clarified that the FCA’s authority under section 55L FSMA is broad and not restricted by section 404F(7), thereby upholding the FCA’s actions against BCMUK.