This is believed to be the first instance of the regulator being subjected to formal proceedings for judicial review.
Weil Gotshal Manges, acting for Lehman Brothers Holdings Incorporated (LBHI), has issued a High Court challenge to the regulator over its time limits, alleging both illegality and irrationality over its attempts to set deadlines for LBHI to respond to the warning notice.
The regulator spent 20 months deliberating before producing its warning notice, which, given the two year statutory time limit, left the LBHI with too little to prepare for the determinations panel hearing, according to its solicitors. The hearing could lead to the panel issuing a Financial Support Direction (FSD).
Yet even though the imposition of an FSD is a reserved regulatory function under the Pensions Act 2004, and thus something for the determinations panel to deal with, the regulator itself sought to impose strict time limits on the targets, within which they had to produce their written responses to the warning notice.
Presiding over the challenge, Mr Justice Mitting ordered the regulator to provide an immediate response to those allegations. The regulator did so, but on the eve of the hearing, abandoned its deadline for LBHI to respond, and acknowledged that it was for the determinations panel to set a new timetable.
The panel has since set a timetable which gives LBHI the maximum available time to prepare for the hearing.
Outer Temple Chambers’ Andrew Spink QC and Richard Hitchcock commented: “It is hoped this will set the future trend. The regulator, once it has produced a warning notice, should leave to the determinations panel all matters associated with the hearing, or further consideration on paper, of the claims made.
“As a party to the FSD proceedings, it is obviously inappropriate for the regulator to set the time limits within which other parties must respond. The determinations panel is to be applauded for taking a wholly different approach to the question of time limits.”
A spokesman for the regulator said: “It is not appropriate for the regulator to comment on ongoing regulatory cases or any satellite litigation.
“In all regulatory investigations, the regulator's case teams seek to engage with all parties to reach a pragmatic resolution that is fair to all parties involved. This includes not only the targets, but also the trustees and, if appropriate, the Pension Protection Fund.
“The length of any investigation and the consequent deadlines set will of course be determined by the complexity of the case.”
