Kession Capital Ltd (in Liquidation) v KVB Consultants Ltd and Others [2026] UKSC 11

Why It Matters

The decision narrows the exposure of FCA‑authorized firms to the actions of their appointed representatives, reinforcing the need for precise authorisation scopes and protecting firms from unexpected retail‑client liabilities.

Key Takeaways

• Authorized firms only liable for appointed reps' professional‑client activities
• Supreme Court upheld Kessian's exemption from retail client liability
• Section 39 responsibility aligns with scope of authorized permissions
• FCA limits on retail dealings prevent regulatory overreach
• Investors' losses unlikely recoverable from insolvent appointed representative

Summary

The Supreme Court resolved a dispute over whether Kessian Capital Ltd, an FCA‑authorized firm, could be held liable for the misconduct of its appointed representative, Jacob Hopkins McKenzie Ltd, under section 39 of the Financial Services and Markets Act 2000.

The Court affirmed that liability under section 39 is co‑terminous with the scope of the authorisation granted to the appointed representative. Because Kessian’s permission was limited to dealing exclusively with professional clients, the activities of JHM that targeted retail investors fell outside the “prescribed business” for which Kessian could be held responsible.

The judgment highlighted that JHM sold units in several property‑development schemes that collapsed, wiping out roughly £1.7 million of investor capital. The Court noted that imposing liability on Kessian for those retail sales would amount to “regulatory overkill” and would unfairly penalise an authorised firm that lacked the competence to supervise retail dealings.

The ruling clarifies the regulatory boundary between authorised firms and their appointed representatives, signalling to the market that firms must carefully match the client segment in their authorisations. It also underscores the FCA’s focus on preventing abuse at the source rather than providing post‑hoc compensation, prompting firms to tighten due‑diligence when delegating retail‑client activities.

Original Description

Kession Capital Ltd (in Liquidation) (Appellant) v KVB Consultants Ltd and others (Respondents)

https://www.supremecourt.uk/cases/uksc-2024-0114

Case ID: UKSC/2024/0114

Judgment date: 1 April 2026

Neutral citation: [2026] UKSC 11

On appeal from [2024] EWCA Civ 765

Issue:

Did the terms of an agreement between the Appellant and a third-party (the “Appointed Representative Agreement” or “ARA”), which prohibited the third-party from dealing with Retail Clients, also limit the Appellant’s liability for acts and omissions from the third-party conducting business with Retail Clients?

Facts:

Kession Capital Ltd (“KCL”), the Appellant, a firm authorised to carry on designated investment business, along with 11 other firms (together, the “Defendants”) entered as principal into an ARA with Jacob Hopkins McKenzie Ltd (“JHM”) to carry on ‘relevant business’ (as defined in the ARA). The agreement was entered into under section 39 of the Financial Services and Markets Act 2000 (“FSMA”).

JHM subsequently promoted and operated various property investment schemes (“Schemes”) in which multiple entities, including KVB Consultants Ltd (“KVB Consultants”), the first Respondent, invested a combined total of approximately £1.7 million. The Schemes subsequently failed, and several entities sought to recover their lost investments from the Defendants.

An application for summary judgment was made against KCL, with judgment having already been obtained against 10 of the Defendants and the other Defendant having been made bankrupt.

The Judge awarded summary judgment on the basis that KCL, by virtue of section 39 of FSMA, assumed responsibility for JHM’s activities in marketing the schemes.

On appeal, the Court of Appeal agreed with this decision, finding unanimously that the ARA prohibited JHM from advising and arranging the Schemes; and by a majority that the terms of the ARA did not limit the Appellant’s liability for acts and omissions from JHM conducting business with Retail Clients. It is the second finding alone which is being appealed to the Supreme Court.

The Supreme Court unanimously allows Kession's appeal.

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