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GC fined over conflicts of interest in instructing outside firm

Volkswagen: Financial services business not told of solicitor’s interests

The former general counsel of Volkswagen Financial Services (VFS) has been fined for failing to disclose his interest in instructing an external firm and his links with a solicitor he then recommended to that firm.

Jeremy Clive Bouch was fined £2,000, the most the Solicitors Regulation Authority (SRA) can currently impose without referring a solicitor to a disciplinary tribunal.

Among other services, VFS provides fleet vehicles which it leases to end-users and it engaged a third-party company to process both notices of intended prosecution for driving offences and parking fines it received in respect of its lease vehicles.

This company failed to do so, which resulted in the fines being imposed and enforced against VFS, and criminal summonses being issued in the magistrates’ court against VFS for its failure to provide drivers’ details.

According to a notice published yesterday by the SRA, Mr Bouch was tasked with dealing with the summonses and instructed ‘Firm B’ to deal with them. Mr Bouch had a longstanding friendship with a solicitor at Firm B.

However, Firm B told Mr Bouch that it did not have sufficient staff to carry out the work and he suggested his close relative, a solicitor, could assist.

Firm B submitted two invoices to VFS for its services totalling £95,150 excluding VAT. “The invoices did not include any breakdown of the work undertaken by Firm B and the fees appeared excessive for the work involved,” the SRA said.

“But Mr Bouch approved payment of both invoices, without disclosing to VFS that his close relative was working on the cases and their fees were included within the invoices.”

Mr Bouch cancelled the arrangement VFS had with Firm B less than six months after it began. VFS commenced a disciplinary investigation. Soon after, he resigned.

Mr Bouch admitted to the SRA that he “caused or allowed an own interest conflict to arise” by failing to disclose to VFS that he was a friend of one of Firm B’s employees, suggesting to Firm B that his relative could work on the cases, failing to disclose to VFS that his relative had been engaged, and then approving payment of Firm B’s invoices.

In mitigation, the solicitor said he was experiencing “significant health and personal issues” at the time. Further, he was “focused on resolving the criminal summons cases for VFS as a priority and in doing so allowed his judgement to be impaired”.

The SRA said: “A fine is appropriate to remove any indirect financial gain arising from the conduct and to uphold public confidence in the solicitors’ profession and in legal services provided by authorised persons.”

Notwithstanding that Mr Bouch co-operated with the investigation and had a clean regulatory record, “it is appropriate to impose the maximum financial penalty internally available to the SRA”.