UBS executive John Pottage challenges watchdog's £100,000 fine

 

The first City boss to be fined for failings by his subordinates is challenging what his employer UBS describes as an “unwarranted” £100,000 penalty issued by the City watchdog in what is being seen as test case before an independent tribunal.

John Pottage personally committed no offence, but he was hit with the fine because the Financial Services Authority alleges that he had failed to take action to deal with “serious flaws in the control environment at UBS Wealth Management” when he was appointed to head the division in 2006.

The regulator said it accepted that Mr Pottage inherited rather than created the deficiencies at the operation, and admitted that he took “a number of steps to improve the control environment”.

However, it argued before the tribunal that the “effectiveness of the CEO is critical to the effective oversight of the business and for that reason the FSA holds CEOs and senior managers to high standards”.

The FSA alleges that the fine was necessary because “Mr Pottage fell short of what could reasonably be expected” which it said was the “core issue for the Tribunal to determine”

It said that it was not until July 2007 that Mr Pottage acknowledged problems and only did so in response to pressure from Zurich, in the wake of further pressure from the FSA.

The case is likely to be closely watched in the City because if the regulator wins it will have a much easier task in imposing similar penalties against other managers who it deems to have failed to act properly even if they have personally not been involved in any wrong doing.

The regulator’s stance is causing concern in the City because managers feel that its demands had not been clearly set out and that the case against Mr Pottage is retrospective.

But the watchdog was harshly criticised for its perceived inertia in the run up to and during the financial crisis and this has resulted in it taking a far tougher stance since.

UBS announced losses of $2.3bn (£1.4bn), largely due to the activities of London based trader Kweku Adoboli.

Mr Pottage still works at UBS, although not in a management role. The bank was itself hit with a fine of £8m in relation to “the extensive systems and controls failings specific to the London International part of UBS Wealth Management in August 2009. The FSA has alleged that these failings meant a serious fraud as a result of unauthorised trading on the wealth management desk was not prevented. The scandal led to four employees being fired, while 39 accounts were affected and compensation of $42m paid out to date.

UBS said it had acknowledged the problems and taken action with independent help.

“This hearing relates specifically to FSA disciplinary action against Mr Pottage for alleged failings in his role as CEO of UBS Wealth Management UK during the period from September 2006 to July 2007. UBS does not believe this disciplinary action is justified.”

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before