Sexual harassment – are regulators taking a more interventionalist stance?

Regulatory bodies such as the FCA, SRA and the BSB have recently taken a stronger stance against sexual harassment in the workplace. In particular, the FCA has decided to investigate whether Crispin Odey is a “fit and proper person” to work in financial services as a result of allegations made against him of sexual misconduct; the SRA has struck off ex-Gowling WLG director Oliver Bretherton for allegations of sexual misconduct (which did not involve criminal allegations); and the BSB ordered barrister Robert Kearney to be disbarred for sexual harassment.

These recent decisions from the FCA, SRA and the BSB demonstrate regulators’ increasing readiness to use their enforcement powers to punish sexual harassment within (and outside) the workplace, as well as to provide guidance to regulated professionals on what kinds of conduct are inappropriate and contrary to their codes of conduct.

The FCA and Crispin Odey

The Financial Times reported in June 2023 a series of sexual misconduct allegations against Mr Odey over a 25-year period. This prompted Mr Odey to step down from Odey Asset Management (“OAM”). OAM later announced that their investment fund would be broken up and its activities would be transferred to other firms.

This followed from Mr Odey being prosecuted for indecent assault in 2020. Although found not guilty, OAM undertook an internal investigation into Mr Odey’s behaviour and decided to keep him on as CEO after giving him a “final written warning” (see article here).

As a result of the Financial Times article, the House of Commons Treasury Committee wrote to the FCA on 14 June 2023, querying the nature and intensity of the FCA’s supervision and engagement with OAM, as well as the steps (if any) the FCA was taking to combat non-financial misconduct (see letter here).

The FCA later confirmed in July 2023 that it had been investigating since 2021 whether Mr Odey is a “fit and proper” person to work in financial services under the Senior Managers and Certification Regime (“SMCR”). In addition, the FCA has been investigating OAM for potential contraventions of the FCA’s Principles for Business for failing to conduct its affairs with due skill, care and diligence and failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems and controls.

Although the FCA investigation has yet to be concluded, the regulator could, in principle, conclude that Mr Odey is not a “fit and proper” person as a result of the sexual misconduct allegations. In 2018, Megan Butler (the Executive Director of Supervision – Investment, Wholesale and Specialists Division) confirmed that sexual harassment falls within the scope of the FCA’s regulatory framework and that individuals might be deemed to not be “fit and proper” as a result of non-financial misconduct (see letter here).

The SRA and Oliver Bretherton

In a landmark judgment, in June 2023, the SRA ordered Mr Bretherton to be struck off the roll of Solicitors as a result of non-criminal sexual misconduct in the workplace.

The Solicitors Disciplinary Tribunal (“SDT”) upheld 70 allegations against Mr Bretherton and held that his conduct was found to be sexually motivated in some cases and amounted to an abuse of position and lack of integrity. The allegations which were upheld included that Mr Bretherton engaged in a ‘fantasised sexual relationship’ with his 18-year old female colleague, Person A, which involved Mr Bretherton sending her a video of himself masturbating and giving her tasks ‘relating to his sexual gratification’.

The SDT has yet to publish their judgment, but a summary of the decision can be accessed here.

The Bretherton decision is a part of a wider trend of the SRA taking action against sexual harassment, bullying and discrimination. In April 2023, the SRA introduced a new set of “fair treatment” rules into its Codes of Conduct, which imposes the following requirements:

• “You treat colleagues fairly and with respect. You do not bully or harass them or discriminate unfairly against them.”
• “If you are a manager you challenge behaviour that does not meet this standard”.

The SRA has also imposed a new duty in the Code of Conduct for Firms to ensure that firms comply with these fair treatment rules.

The BSB and Robert Kearney

On 19 July 2023, barrister Robert Michael Kearney was ordered to be disbarred by an independent disciplinary tribunal following findings of professional misconduct on a number of charges brought by the BSB. These charges related to two separate incidents of alleged sexual harassment involving two pupil barristers and a mini-pupil. On both occasions, the sexual misconduct was said to be linked to the consumption of alcohol.

The tribunal noted that sexual misconduct harms not only individual direct victims, but also “the profession as a whole” and undermines “public trust in the profession, diversity, recruitment and retention. As a consequence, serious sanctions are inevitable, including a deterrent element”. The tribunal also noted that the misconduct took place in a professional context and was not a “fleeting or a one-off moment”, the misconduct occurred within a public setting and that pupil barristers “were highly exposed and vulnerable precisely because of their pupil status”.

The tribunal also took into account that Mr Kearney had previous disciplinary findings against him for professional misconduct relating to sexual misconduct and that his antecedent history is “significant and seriously aggravating”. The BSB had previously imposed sanctions on Mr Kearney for committing sexual misconduct, which had resulted in sanctions including a six-month suspension, a reprimand and a fine.

The tribunal also considered Mr Kearney’s state of intoxication in relation to the acts of sexual harassment against two pupil barristers to be a key aggravating feature, as Mr Kearney had a previous adverse finding and sanction based on his sexualised conduct when drinking. “Both with that experience and as a senior member of the Bar he was fully aware that it was his responsibility to ensure that he did not allow drink to cause him to lose his self-control in the way that he did”.

A copy of the tribunal’s decision can be accessed here.

What to take away

The enforcement actions that the SRA and the BSB took against Oliver Bretherton and Robert Kearney respectively demonstrate those regulators’ readiness to take decisive action against regulated individuals that commit sexual misconduct both within and outside of the workplace.

Farore Law’s Managing Partner, Suzanne McKie KC, was previously quoted in Ignites Europe regarding the Crispin Odey case, stating that the FCA has the opportunity “to state not only what kinds of conduct are inappropriate and, potentially in breach of the code of conduct, but whether the FCA’s remit is also covered by inappropriate behaviour that occurs outside the workplace” and that “[t]here will be, and most probably needs to be, a greater number of firms and companies investigating not only individuals, but the firms themselves for either turning a blind eye or not having sufficiently robust systems in place in order to detect poor behaviour” (see article here).

Professional disciplinary sanctions might ultimately prove to be more effective in curbing sexual harassment within regulated professions than civil claims against employers and individuals, given that disciplinary sanctions have a greater deterrent effect on regulated individuals and firms than merely paying out compensation to victims of sexual misconduct.

Farore Law is a leading boutique law firm that has a wealth of experience in advising the victims of sexual harassment to seek justice. We are well placed to provide appropriate advice regarding making an allegation through your company’s internal grievance process, seeking a settlement agreement and commencing litigation. Our lawyers frequently advise senior executives and other individuals who have been subjected to sexual harassment (or have been accused of committing sexual harassment) and recognise the importance of anonymity and reputation management.

Please contact us if you require legal advice after being subjected to sexual harassment and/or less favourable treatment because you have either submitted to, or rejected, sexual harassment.