What is lack of integrity?

8 March 2017

Newell-Austin v SRA [2017] EWHC 411 (Admin) is the latest case to deal with the question of what is lack of integrity and may finally put to rest the issues around the meaning of the phrase. 

The obligation to act with integrity is a common feature of most professional codes of conduct.  Whilst the meaning of dishonesty has been the subject of extensive legal analysis, the circumstances in which someone may lack integrity had not been explored in any great detail until the last few years.  One reason may be that integrity, unlike dishonesty, neither forms part of the criminal law nor is it a gateway to civil liability.  Its relevance is therefore confined to the context of professional conduct.  It may also be that that an allegation that includes lack of integrity has become more fashionable for those prosecuting in professional disciplinary tribunals as proving dishonesty can often be difficult given the need to demonstrate that not only the actions of the Respondent were dishonest by an objective standard but also the Respondent effectively knew that they were acting dishonestly.   It is therefore perhaps not surprising that the main issue has been the proximity of lack of integrity to dishonesty.

The concept was mentioned by Lord Bingham in the seminal case of Bolton v The Law Society [1994] 1 WLR 512 where he observed:

“If a solicitor is not shown to have acted dishonestly, but is shown to have fallen below the required standards of integrity, probity and trustworthiness, his lapse is less serious but it remains very serious indeed in a member of a profession whose reputation depends upon trust.”

However, it was not until nearly a decade later that series of cases in the Financial Services and Markets Tribunal attempted a definition. 

In Hoodless & Blackwell v FSA (3 October 2003), the Financial Services and Markets Tribunal stated:

“In our view 'integrity' connotes moral soundness, rectitude and steady adherence to an ethical code. A person lacks integrity if unable to appreciate the distinction between what is honest or dishonest by ordinary standards. (This presupposes, of course, circumstances where ordinary standards are clear. Where there are genuinely grey areas, a finding of lack of integrity would not be appropriate.)”

The matter was further considered in Vukelic v FSA, 13th March 2009, where the Tribunal observed:

“We do not disagree with what is said about integrity in Hoodless & Blackwell but we do not take [the description] as being a comprehensive test of which is of application beyond the facts of that case. In an area of life giving rise to circumstances of great variety and complexity there may well be many other circumstances in which the FSA could fairly conclude that an applicant lacked integrity, a concept elusive to define in a vacuum but still readily recognisable by those with specialist knowledge and/or experience in a particular market.”

The Financial Services and Markets Tribunal returned to the issue again in Batra v FCA [2014] UKUT 0214 (TCC) and, after quoting the passage from Hoodless & Blackwell above stated as follows:

“While the passage quoted above is useful guidance as to the meaning of the concept, the second sentence is clearly not the only circumstance in which a person can be said to lack integrity. In the subsequent cases of Vukelic v FSA (2009) at [23] and Atlantic Law LLP and Greystoke v FSA [2010] UKUT B30 (TCC) at [96], the Tribunal has cautioned against attempting to formulate a comprehensive definition of integrity. As the Tribunal in Vukelic observed, integrity remains a concept “elusive to define in a vacuum but still readily recognisable by those with specialist knowledge and/or experience in a particular market.”

The Tribunal in First Financial Advisors Limited v FSA [2012] UKUT B16 30 (TCC) agreed with the observation in Vukelic and endorsed the guidance in Hoodless and Atlantic Law. At [119], the Tribunal observed:

Even though a person might not have been dishonest, if they either lack an ethical compass, or their ethical compass to a material extent points them in the wrong direction, that person will lack integrity.”

We agree. A lack of integrity does not necessarily equate to dishonesty. While a person who acts dishonestly is obviously also acting without integrity, a person may lack integrity without being dishonest. One example of a lack of integrity not involving dishonesty is recklessness as to the truth of statements made to others who will or may rely on them or wilful disregard of information contradicting the truth of such statements. Such behaviour was found to be evidence of a lack of integrity by the Tribunal in Vukelic”

More recently the meaning of lack of integrity has been considered in a series of cases in the Administrative Court involving solicitors.  The Courts approach has been that caution needs to be exercised in attempting to formulate an all-encompassing definition.  In SRA v Chan and others [2015] EWHC 2659 (Admin) Lord Justice Davis observed as follows:

"As to want of "integrity", there have been a number of decisions commenting on the import of this word as used in various regulations. In my view, it serves no purpose to expatiate on its meaning. Want of integrity is capable of being identified as present or not, as the case may be, by an informed tribunal or court by reference to the facts of a particular case.”

In Scott v SRA [2016] EWHC 1256 (Admin) the Divisional Court followed the same approach. 

In Newell-Austin, Mr Justice Morris seeks to draw these threads together with a helpful summary of the cases referred to above:

“…as regards what amounts to "lack of integrity", from the cases of Hoodless supra, Scott in the Divisional Court, supra, and SRA v Chan [2015] EWHC 2569 (Admin) the following principles can be derived:

1) Integrity connotes moral soundness, rectitude and steady adherence to an ethical code: see Scott §§38 and 59, both citing Hoodless §19.

2) No purpose is served by seeking to expatiate on the meaning of the term. Lack of integrity is capable of being identified as present or not by an informed tribunal by reference to the facts of a particular case: see Chan §48.

3) Lack of integrity and dishonesty are not synonymous. A person may lack integrity even though not established as being dishonest. An example, might depending on the particular facts, be the position of a solicitor taking money out of a client account and from time to time making good any deficiency, when convenient: see Scott §§59.

…..it is clear that, by contrast with the test of dishonesty, the test of "lack of integrity" is an objective test alone. A distinction must be drawn between subjective knowledge of the facts of the underlying conduct (which are alleged to give rise to the lack of integrity), and subjective knowledge of the fact that the conduct would be regarded by reasonable people as lacking in integrity. There is no requirement that a solicitor must "subjectively" realise that his conduct lacks integrity”

Whilst it has taken a while to get here, we now seem to have a clear set of principles as to what constitutes lack of integrity. 

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