In an important ruling, a Divisional Court has dismissed an application for judicial review brought against KPMG in their role as a ‘Skilled Person’ under section 166 FSMA.
The application arose out of the mis-selling of interest rate hedging products to a large number of customers by various banks including Barclays Bank (the Second Interested Party). Following investigation of this mis-selling by the Financial Conduct Authority (the First Interested Party), Barclays undertook to the FCA to set up a scheme to provide redress to certain customers who had been mis-sold products. Upon receipt of a notice under section 166 FSMA, Barclays appointed KPMG to act as a ‘Skilled Person’ tasked with reporting to the FCA on the manner in which the scheme was applied. In its undertaking to the FCA, Barclays agreed to make no offers of compensation to customers under the scheme save with the approval of KPMG. KPMG in turn was tasked with assessing whether offers were appropriate, fair and reasonable.
The Claimant, a property development company, had participated in the scheme, and had been offered compensation by Barclays. However, the compensation offered did not include a sum for consequential loss the Claimant alleged it has suffered. The Claimant claimed that Barclays had not deal fairly with its application for this loss.
The Claimant's claim against KPMG was predicated on the submission that KPMG's role as independent reviewer had a sufficient "public flavour" to give rise to public law duties and make KPMG amenable to judicial review. The Claimant alleged KPMG had breached these duties by approving the allegedly inappropriate offer by Barclays.
The judgment of Lord Justice Elias and Mr Justice Mitting found against the Claimant on both counts. The Court found that KPMG was not amenable to judicial review as, although it played an important part in the redress scheme, there was no direct public element to its role. The Court further found that even if KMPG were amenable, there was no particular error in the handling of the Claimant's case that could support a finding that any of the alleged public law duties had been breached.
The full judgment can be read here: http://www.bailii.org/ew/cases/EWHC/Admin/2016/323.html
Javan Herberg QC and Hanif Mussa acted for the Defendant KPMG
Monica Carss-Frisk QC, Daniel Burgess and Kerenza Davis acted for the Financial Conduct Authority (the First Interested Party)
Dinah Rose QC and Ben Jaffey acted for Barclays (the Second Interested Party)