The director of a UK investment firm has had his career in financial services terminated after being caught fare dodging. He paid the money back and apologised; and even the train company didn’t take any legal action against him. So what lies behind the regulator’s actions?
Some background – Jonathan Burrows regularly took the train from Stonegate in Sussex (a rural station with no entrance controls) to Cannon Street station in London. He paid for this journey by only ‘touching out’ his pre-paid Oyster card at Cannon Street station, incurring the maximum Oyster fare of £7.20 rather than paying the train fare of £21.50. Last summer, ticket inspectors caught him and Burrows subsequently paid back £42,550 to the train company.
The Financial Conduct Authority has now removed his ‘approved person’ status, saying that his actions ‘demonstrated a lack of honesty and integrity’. As a result, he is now banned from working in anything other than a back-office job in financial services. It’s a significant step for the FCA to take. So what lies behind their actions? After all, it was outside of work and the train company has not ‘lost out’ in revenue terms.
At the heart of the FCA’s thinking was that if a senior regulated person was willing to exploit a weakness in one system for gain, then that lack of honesty and integrity presented a risk to other systems over which he held a position of influence. It was a simple ‘if he could do that there, then he could do that here’.
Another key factor was the systematic way in which Burrows carried out his fare dodging. It was not on one or two occasions, but many hundreds of times over several years. The total amount of dodged fares is secondary; the repeated wrongdoing is primary. It had become a feature of how he went to work every day; that makes it a short step from how he might go about work every day.
Might the Burrows case be a one-off? After all, the scale of his fare dodging was unique and he is only the second person to have his approved person status removed for misconduct unrelated to his job. And honesty and integrity have long been part of the approved persons regime. So what’s changed?
The FCA wants to drive home a clear message to senior people in financial services that individuals will be held to account just as much as firms. In the past, the regulator has paid more attention to misconduct at the firm level; now it wants to send a message that it’s individuals who run regulated firms and that comes with responsibilities as well as rewards.
So we should expect to see more cases like this. One that I expect to see is someone having their approved person status removed because of retaliation suffered by a whistleblower. It may even involve someone in authority found to have been condoning such retaliation simply by their inaction. That would attract even greater media attention than that paid to Burrows.
It is likely that the firm Burrows worked for had its employees take some training courses on conduct and sign off having read its code of conduct each year, but as I’ve pointed out before, formal steps like this don’t address the more deep seated influences that can determine how people behave at work. To get at those, you need to understand the ethical culture within the firm. Understanding that will help you answer one of the FCA’s fundamental questions: why are you doing what you’re doing.