Court of Appeal decision on Appeal against summary judgment obtained by FSA in relation to unregulated betting scheme

Background to Appeal

On 23 November the Civil Division of the Court of Appeal handed down a judgment in Financial Services Authority v Fradley & Woodward in an appeal brought by Mr Fradley against an order made by the High Court in December 2004 which had, on an application for summary judgment by the FSA, declared that Mr Fradley had carried on unauthorised investment business in the UK contravention of section 19 Financial Services and Markets Act 2000 (‘FSMA’). FSA had alleged that Mr Fradley had, through the medium of his firm Top Bet Placement Services (“TBPS”) been jointly engaged in establishing and operating a collective investment scheme in conjunction with a company known as 147 Racing Limited, of which Mr Woodward (who was not a party to this appeal) was director and company secretary. 147 Racing Ltd sent out unsolicited mailshots to members of the public inviting them to make money through betting on horse races by using information not generally available. Once an individual had joined the scheme he gave a standing order mandate to 147 Racing Ltd and although he could place bets himself was also given an option to use TBPS’s bet placement service. If he opted to give TBPS a bet placement mandate then they were sent its terms and conditions which the High Court judge described as providing “ that the member’s betting bank would be held in TBPS’ s client account, out of which payments could only be made for the purpose of payments to bookmakers, repayment to the members, or payment to TBPS’ s management fee and ‘placement levy’; and that clients’ accounts would be updated daily and computerised accounts issued monthly. ”