UK financial regulators have failed to penalize John Pottage, the former chief executive of UBS’s UK wealth management, for inadequate supervision during his watch and for his inability to prevent serious fraud.
The case was straightforward; the FSA was seeking to fine Pottage £100,000 for misconduct after uncovering a series of compliance problems in UBS. It marked the first time regulators had attempted to penalize a senior manager for inadequate supervision rather than for actual wrongdoing.
However, the financial watchdog’s allegations were deemed unjustified by UBS, which stood by Potter throughout the proceedings. The Upper Tribunal agreed that Pottage ‘acted reasonably’ and found the FSA’s decision was not supported by evidence.
The question is: How will the FSA treat wealth bosses after losing this particular case?
Harvey Knight, a partner and head of the UK financial services team at law firm Withers, believes it won’t have an impact on future cases. Regulatory guidelines and expectations of senior managers of FSA authorized firms have changed in the wake of the financial crisis, and any future and current managers will be given clear instructions when it comes to their job requirements.