City view: Fair penalty for fare dodging?

A question of right and wrong? Certainly – but we believe the sanction against Jonathan Burrows was grossly disproportionate

The New Year has not been a good time for rail travellers, what with over-running engineering works, signal failures, tunnel fires, rebuilding main-line termini and adverse weather conditions.

But for one individual who had spent the previous five years commuting to work in the City from his home in Sussex, all these were problems from a past life. In December, Jonathan Burrows, a (now former) managing director with BlackRock, was banned by the Financial Conduct Authority (FCA) from working in financial services as a result of avoiding paying his full train fare during those five years.

This is a highly significant decision by the FCA. It marks the first time that the UK central regulator has taken action against an individual solely on account of that person’s behaviour in his personal life, which has absolutely nothing to do with his work, his customers or his firm.

The regulator was absolutely right to call Mr Burrows to account and to make it publicly clear that financial services professionals cannot pick and choose when to behave ethically. CISI members know the importance of adhering to our Code of Conduct at all times, including principle 8 which states members should “strive to uphold the highest personal and professional standards”. It’s a 24/7 obligation, not a 9-5 option.

The FCA was right to state that “Burrows held a senior position within the financial services industry. His conduct fell short of the standards we expect. Approved persons must act with honesty and integrity at all times and, where they do not, we will take action.” Had Mr Burrows been a CISI member, he would have been called to account to face his peers.

However, while we applaud the taking of action and the reminder that ethics is ‘always on’, we believe the sanction was grossly disproportionate and sends the wrong message. There is no doubt that Mr Burrows was deliberately and repeatedly dishonest. However, when confronted by the train inspectors, he admitted the offence and immediately paid the fares and attendant fine amounting to £43,000. As far as the railway company was concerned, that was the end of the matter and it did not press charges.
What would have been a proportionate sanction? Perhaps a sizeable fine?Clearly some form of punishment is required, especially as this was not a one-off offence. In deciding the sanction, it may be helpful to consider the following:

a) Have his actions adversely affected the financial system? No.
b) Have his actions affected the market? No.
c) Did it have any direct adverse effect or influence on clients or counterparties? No.
d) Did he admit his guilt? Yes.
e) Did he make reparations? Yes.

So, what would have been a proportionate sanction? Perhaps a sizeable fine, maybe a short-term suspension from working in the sector? No. The FCA rated this as being on a par with the most serious offence possible and has banned him for life.

This penalty is more draconian than those handed to the LIBOR or interest-rate fixers, or those who peddled the toxic PPI products or precipice bonds.

So what has happened here? Why hasn’t the FCA been consistent and applied its policy in this case? What message is it sending? What incentive will people have to accept responsibility if they know there is nothing to be gained from owning up; surely it’s better to keep quiet and deny everything?

Mr Burrows’ case attracted considerable media interest, with the tabloids picking up the story over the summer and replaying it regularly; baying for blood with greater intensity and hysteria each time.

Against this background, and having had the incident brought to its attention, it was absolutely right for the FCA to take action. However, the FCA was wrong in its disproportionate response, which has the whiff of courting mob rule and lacking in fairness – a key ingredient of behaving with integrity.

The original version of this article was published in the March 2015 print edition of the Review.
City view is an opinion column and the views expressed in it do not necessarily reflect CISI official policy.

Published: 16 Mar 2015
  • Integrity & Ethics
  • The Review
  • Opinion
  • Jonathan Burrows

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