• news-banner

    Expert Insights

A regulator's demand for documents - whose privilege is it anyway...?

A recent decision of the English High Court - A v B, The Financial Reporting Council Limited - deals with an interesting issue of privilege in relation to regulatory investigations and enforcement. Clients of any regulated service providers with whom privileged documents are shared should pay particular attention to the terms of their engagement; they should ensure they are notified of regulatory demands for documentation which may be privileged.    

In this case, The Financial Reporting Council Ltd (the "FRC") (the regulator for auditors in the UK) sought disclosure from the auditor of documents belonging to the auditor's client. Furthermore, the client claimed privilege over those documents. Matters ground to a halt, however, as there was a dispute between the auditor and its client as to whether the documents were, in fact, privileged.  

The court did not grant the relief sought by the client (which basically sought clarification as to who was entitled to exert the privilege in the documents requested by the FRC). It would not be drawn on the specific terms of the declaration sought. However, the court did say that the auditor must form its own view on whether documents are privileged, whether the privilege is that of the auditor or its client. The court said that the statutory duty to disclose documents to its regulator was on the auditor and disclosure could only be refused on the grounds that a document was actually privileged. Mere assertion of privilege by the client was insufficient.

If the client disagrees with the service provider's analysis of privilege, then it will need to apply to court for an injunction preventing the service provider from giving the regulator the document. Whilst the regulator may, of course, ultimately be interested in what the court determines and might join that action, in reality this debate is one to be had between the client and the service provider.        

This case may have wider impact on other areas of regulation such as in FCA-authorised businesses where the FCA utilises its powers to compel a regulated person to disclose documents. The question there would be whether the client's documents are "protected items" under section 413 of the Financial Services and Markets Act 2000. If the client and the service provider do not agree on a document's "protected" or privileged status, this judgment is likely to be "read across" so that the service provider has to make up its own mind whether to exert the client's claim to privilege. If the client disagrees, it will have to apply to court for injunctive relief, seeking to prohibit the service provider from disclosing the document to the FCA.  

The key point to bear in mind as a client in mitigating this risk is to ensure that all of your contracts with regulated service providers include specific wording which protects your privilege. In particular, there should  be an obligation which requires the service provider to notify you should they receive a regulator's request or demand for documents which relate to their engagement with you. That should start a dialogue in which you can ascertain and debate, hopefully in a grown-up manner, which documents might or might not be privileged. If the grown-ups cannot sort this amicably, at least you will then have the opportunity to seek the court's assistance in blocking the regulator's access to the documents by preventing the service provider disclosing it.     

To find out more on how we can help you, please visit our Investigations page.

Our thinking

  • IBA Annual Conference 2024

    Charlotte Ford

    Events

  • LIDW: Is arbitration an effective process for disputes involving state interests: a panel discussion of concerns raised in Nigeria v. P&IDL [2023] EWHC 2638

    Richard Kiddell

    Events

  • LIDW: An Era of Constant Change – an event to explore the General Counsel’s role in delivering sustainable growth whilst managing global ESG risks

    Caroline Greenwell

    Events

  • LIDW: Liability imposed on UK Directors and how to mitigate the risks

    Claudine Morgan

    Events

  • The Law Society Gazette and CDR Magazine quote Caroline Greenwell on the LIBOR appeal

    Caroline Greenwell

    In the Press

  • Consequences of Disobeying Court Orders?

    Stephen Chan

    Insights

  • Disputes Matters: International Arbitration

    Thomas R. Snider

    Podcasts

  • CDR Magazine quotes Stewart Hey on the cum-ex scandal

    Stewart Hey

    In the Press

  • Amendments to the Swiss Civil Procedure Code: Enhancing International Litigation and Streamlining Processes

    Remo Wagner

    Quick Reads

  • Thomas Snider and Lucy Wicksteed write for The Oath on the role of the national courts in arbitration

    Thomas R. Snider

    In the Press

  • A Guide to Arbitrability in International Arbitration

    Peter Smith

    Insights

  • DIFC Courts Release 2023 Annual Report

    Peter Smith

    Quick Reads

  • Caroline Greenwell writes for The Law Society Gazette on the LIBOR scandal

    Caroline Greenwell

    In the Press

  • The Rights of Beneficiaries: Access to Trust Information

    Samantha Ruston

    Insights

  • Charles Russell Speechlys welcomes insolvency litigation specialist in Dubai

    Nicola Jackson

    News

  • Digital Deception: The Rise of Deepfakes

    Mark Hill

    Quick Reads

  • City AM quotes Charlotte Duly on the importance of business branding

    Charlotte Duly

    In the Press

  • Essential Intelligence – UAE Fraud, Asset Tracing & Recovery

    Sara Sheffield

    Insights

  • ‘One plus one makes two': Court of Protection finds conflict of interest within law firm structure

    Katie Foulds

    Insights

  • Arbitration: Getting value for your money

    Daniel McDonagh

    Insights

Back to top