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Financial market learnings from UK’s Judge Tim Herrington

Oftentimes, when life turns out different than what we’ve planned, it ends up even better.

Such is the case of UK’s Upper Tribunal Judge Timothy Herrington; thanks to his wife who persuaded him to apply for the job instead of retiring.

Judge Herrington was a judge at the Upper Tribunal’s Tax and Chancery Chamber (UTTCC) until September 2023. It’s a job that he says “is the most challenging, but most rewarding job I’ve done out of my three careers.”

His career spans almost five decades, and more than half of that was spent at the international law firm Clifford Chance, his first profession following his qualification as a solicitor in 1978. He received his law degree from the University of Bristol in 1975.

He became a partner at Clifford Chance at the age of 30. It helped that he was the one who delved into the then new Financial Services Act 1986. He became known as one of the first city lawyers to specialize in the regulation of financial markets.

He decided it was time to conclude his career at Clifford Chance when he reached his 50s, after almost 30 years of highly-intensive work at the firm. In 2005, he joined the UK’s Financial Services Authority (FSA)—which is now the Financial Conduct Authority (FCA)—and became chairman of its Regulatory Decisions Committee, the independent committee which decides whether to impose fines and banning orders on those found to be in breach of the regulatory rules.

He was with the FSA for seven years, and was already thinking of retiring. But Judge Herrington’s wife thinks he’s too young for that. Thus, upon her prodding, he applied for the job as a judge through the Judicial Appointments Commission.

A reasonable excuse

What amounts to a reasonable excuse?

According to Judge Herrington, the most common form of tax appeal that people bring to the UTTCC is about the late filing of their tax return, which has an automatic fine of £100. They can challenge it if they have a reasonable excuse.

In Christine Perrin vs Her Majesty’s Revenue & Customs (HMRC), which is the UK government’s tax authority, the appellant argued that she had genuine excuse for the late filing of her tax return.

In gist, the appellant thought she submitted her return but “unwittingly omitted to complete the final stage of submission.” She appealed that, because she was honestly unaware that she did not complete the process, she had a reasonable excuse and, therefore, should not be fined.

The upper tribunal upheld the Firsttier Tribunal’s (FTT) decision that  “to be a reasonable excuse, the excuse must not only be genuine, but also objectively reasonable when the circumstances and attributes of the actual taxpayer are taken into account.”


The fine line between professional and personal integrity

One challenging case that was brought to the UTTCC, Jon Frensham vs the Financial Conduct Authority (FCA), involved the integrity of a financial adviser to perform his profession after being convicted of attempted sexual grooming of a 15-year old child.

Judge Herrington elucidated that, if the offense was theft or dishonesty, clearly, one cannot be competent to advise other people about their financial affairs. But for this non-financial case, while it is undoubtedly a serious offense, does that also mean Mr. Frensham was no longer fit and proper to advise clients on their financial affairs? 

Ultimately, the upper tribunal supported the FCA’s decision to ban him because of the fact that he had not given a full disclosure to the FCA about what had happened—that he had been arrested and held in custody and he was seeking to continue to run his business from prison—and such behavior showed a lack of integrity. 

Judge Herrington shared with this author that such cases show the dilemma that judges have. As a judge, he has to let “the law alone, aside from politics or any social views that people would have, to influence the matter. You have to decide the case without fear or favor, which is what your judicial oath says.”


Keeping ahead of the game

Judge Herrington is currently the president of the Dubai Financial Services Authority’s (DFSA) Financial Markets Tribunal (FMT), similar to his work with the UK’s FSA.

He’s been impressed with what Dubai is doing to become a regional and international financial center. He believes that for financial markets to survive competition, they need to keep ahead of the game. 

He also deems international cooperation among financial regulatory bodies an important facet of addressing challenges, because while there is competition among financial markets, financial services knows no borders.

And while London continues to have the crown as the top global financial center, Dubai is truly fortunate to have in its DFSA team Judge Herrington, whose experience and wisdom can greatly help navigate the complexities of a globalized financial market. 

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