United Kingdom
What’s this all about?
Following a lengthy consultation, the FCA has issued Policy Statement (PS25/5) setting out its proposals for greater transparency in enforcement investigations.
Ben Cooper, our Head of Risk & Financial Crime says:
“The FCA’s Policy Statement marks a shift towards greater transparency in FCA enforcement. Although the FCA has rowed back slightly from the initial proposals, with clearer criteria for naming firms, it’s vital that regulated firms strengthen their governance and communications to manage the increased risk of early public scrutiny.”
Points not to miss…
Amendment of Enforcement Guide (EG) and Decision, Procedures and Penalties Manual (DEPP)
The FCA will amend its EG and DEPP sourcebooks with a view to:
- allowing earlier publication of enforcement investigations, especially when in the public interest.
- introducing a structured approach to public announcements, including anonymised disclosures.
- providing greater clarity on investigation outcomes and timings, and decision criteria.
- aligning treatment of unauthorised activity investigations with that of authorised firms.
These changes aim to deliver consistency, fairness, and improved market confidence.
Investigation outcomes and timings
The FCA will publish outcome data quarterly, categorising whether investigations:
- result in no further action
- are resolved with regulatory/civil outcomes
- lead to criminal action or settlement
Where investigations result in no further action, the parties will be notified promptly and may request the FCA to publish a statement of exoneration.
The FCA aims to conclude investigations more efficiently, with clearer internal metrics to drive accountability.
Unauthorised activities investigations and outcomes
Investigations into unauthorised activity will be disclosed on the same basis as those into authorised firms, where it is in the public interest. The FCA will consider disclosure where there is potential consumer harm or reputational risk. Where such cases conclude with no action, the FCA may still publish an outcome summary – a change from prior practice.
The FCA will reactively announce the existence of an investigation where a leak or media report means the information is already in the public domain. The FCA hopes this will avoid market uncertainty and help it to control the narrative in relation to an investigation. Announcements may include details such as the name of the subject, the nature of the misconduct under investigation, and the FCA’s rationale for acting.
Where the issue is of particular public concern, or the FCA considers it will send an important deterrent signal, the FCA will begin issuing anonymised public announcements in relation to certain investigations where it is not appropriate to name the firm or individual.
Exceptional circumstances test
The FCA may announce the opening an enforcement investigation where exceptional circumstances exist, even before formal findings or outcomes are available.
Exceptional circumstances will be assessed on a case-by-case basis, but may include consideration of:
- whether there is a significant risk to consumers, markets or the financial system that justifies immediate public awareness;
- whether the subject of the investigation is a publicly listed entity or other market-sensitive firm where non-disclosure could lead to market distortion or harm to investor confidence;
- whether there has been significant public speculation or media coverage such that silence from the FCA may cause uncertainty; and
- whether the investigation involves widespread or novel misconduct.
This test is complementary to the general Public Interest Test and reflects the FCA’s desire to adopt a more proactive and open enforcement stance, particularly in high profile or systemic cases.
Our view
Overall, the FCA has stopped short of the initial proposals posited in the consultation paper. It is likely the initial backlash to many of the key proposals in the consultation paper, namely the broadminded “name and shame” policy, forced a rethink in how the regulator approached improving transparency in its enforcement processes.
Nonetheless, it is still a significant shift in the FCA’s enforcement culture. The policy statement reflects a bolder, more assertive regulator that is willing to act publicly and early to protect markets and consumers — but one that must now manage the risks of premature reputational harm and procedural fairness.
Contributor | Sam Omozusi
This article first appeared on Lexology | Source
