FIN.

FCA consults on new approach to enforcement investigations

The FCA is consulting on improving pace and transparency around enforcement cases. Key proposals in relation to investigations into firms are:

  • publicly announcing that the FCA has opened an enforcement investigation, which may include (1) publishing the identity of the subject of the investigation, the industry sector and regulatory or legal provisions the investigation relates to, and a summary of the suspected breach, failing or other misconduct being investigated and (2) publishing updates on the investigation, if the FCA assesses that it is in the public interest to do so. This will be established on a case-by-case basis, using a new public interest framework (see below);
  • announcing case closures where the FCA’s investigations have not led to regulatory or other action;
  • amendments to EG to:
    • set out the FCA’s key enforcement policies relevant to its investigation process;
    • direct stakeholders to information about the FCA’s strategic approach and general enforcement priorities; and
    • delete repetitive or duplicative content.

The proposed public interest framework will include a number of factors (the below are non-exhaustive) which the FCA considers indicate that an announcement or update will be in the public interest, specifically the likelihood that it will:

  • enable the interests of potentially affected customers, or consumers or investors more generally, to be protected;
  • help the investigation, for example by encouraging potential witnesses or whistleblowers to come forward;
  • address public concern or speculation, including by correcting information already in the public domain;
  • provide reassurance that the FCA is taking appropriate action;
  • deter future breaches of FCA rules; or
  • otherwise advance one or more of the FCA’s statutory objectives, including protecting and enhancing the integrity of the UK financial system.

The framework will also include factors that the FCA considers indicate that an announcement or update would not be in the public interest, for example if it would have an adverse impact on:

  • the conduct of the investigation or an investigation by another regulatory body or law enforcement agency;
  • the interests of consumers; or
  • the stability of the UK financial system or the FCA’s ability to otherwise carry out its statutory functions.

In respect of investigations into individuals, the FCA cannot publish the name of an individual or otherwise process their personal data unless it is necessary to do so for the purposes of the investigation, eg to encourage witnesses to come forward to assist with the investigation or fulfil the FCA’s accountability to Parliament. As such, the FCA is proposing that it usually will not announce that it is investigating a named individual but there will be circumstance when it can lawfully make such announcement, in the public interest.

The consultation closes on 16 April 2024.

Therese Chambers (joint executive director of enforcement and market oversight) delivered a speech to launch the consultation and, separately, the FCA has also updated its webpage on investigation opening criteria. Updates include:

  • amendments to “How we assess serious misconduct”; and
  • new sections entitled “Co-operation”, “Other authorities with an interest” and “Joint investigations with the PRA”.

Lucy Hadrill