Clifford Chance

The FCA's revised Enforcement Guide, released on 3 June, confirms that regulated firms or listed companies that are subjects of enforcement investigations will not be routinely "named and shamed". It also clarifies the FCA's approach to some important practical aspects of enforcement investigations.

Background

Since February 2024, the FCA has been consulting on a revised version of its Enforcement Guide. The most high-profile topic addressed in the consultation was the proposed introduction of a "public interest" test for the public naming of subjects of enforcement investigations. It was anticipated that this would lead to "naming and shaming" of many, if not most, subjects of enforcement at an early stage in the investigation process. That proposal has been abandoned in large part. But the FCA has proceeded with some changes relating to enforcement publicity as well as other revisions to the Enforcement Guide designed, in broad terms, to streamline the Guide and focus it more narrowly on the enforcement process.

We examine below some of the key questions for firms and individuals who are or may become subject to enforcement investigations.

Which enforcement investigations will be publicised?

The FCA's CEO, Nikhil Rathi, indicated in his letter to the House of Commons Treasury Select Committee dated 11 March 2025 that the FCA will not proceed with its proposals routinely to "name and shame" firms subject to enforcement investigations at an early stage of those investigations. In that letter, Mr Rathi confirmed that the FCA had stepped back from applying a "public interest" test when deciding whether to release details at early stages of investigations, and instead will only do so in "exceptional circumstances" (as is currently the case).

We examined the FCA's proposals, the reaction to them and their subsequent retraction in our posts published in March 2024 and March 2025.

The Policy Statement accompanying the revised Enforcement Guide states that "considering continued concerns and lack of consensus, we will maintain our existing approach to publicity for regulated and listed firms." (emphasis added). This addresses an ambiguity left over from Mr Rathi's letter in March 2025, which referred to "regulated firms carrying out authorised activities". The FCA has now confirmed that the default position will remain that it will not routinely publicise enforcement investigations concerning listed companies (whether those investigations concern suspected breaches of Handbook requirements by virtue of their status as regulated entities or suspected breaches of the Listing Rules by virtue of their listed status).

Consistent with the indications given in Mr Rathi's March letter, the FCA has now made clear that there are three categories of situations in which it will publicise investigations, applying a "public interest", rather than an "exceptional circumstances" test.

These three categories are: 

1. where the FCA is investigating suspected unauthorised activity (newly defined as activity in breach of s. 21 of FSMA or carried out in breach of a statutory requirement to be authorised or registered with the FCA or PRA) or criminal offences related to unregulated activity and it considers an announcement is desirable to warn or alert consumers or investors or will aid the investigation (for example, by bringing forward witnesses);
2. where the FCA wishes to reactively confirm that it is investigating a subject if the subject, an affiliated company or a regulatory body, government or public body in the UK or a partner jurisdiction has/have already made that fact public; and
3. to allow the FCA to share information publicly about an investigation on an anonymised basis, where there is an educational benefit in informing people generally about the types of conduct it is investigating or to encourage compliance by firms with rules and requirements.

The revised policy regarding announcements of investigations will apply to all FCA investigations started on or after 3 June 2025 by way of statutory appointment of investigators, whether under FSMA or otherwise. Decisions on whether to share information about an investigation will be taken at the start of the investigation. If no information is shared at that point, the FCA will continue to consider whether to share information at regular review points during the investigation.

The FCA has said it will report annually on the number of cases in which it shares information about an investigation and then takes no further action, which will be a useful metric to assess the impact of the FCA's revised approach to publicising investigations.

What are "exceptional circumstances"?

The "exceptional circumstances" test remains unchanged as against the previous version of the FCA's Enforcement Guide. The exceptional circumstances in which the FCA might make a public announcement that it is investigating a matter are where it considers the announcement is desirable to:

1. maintain public confidence in the financial system or the market; or
2. protect consumers or investors; or
3. prevent widespread malpractice; or
4. help the investigation itself, for example by bringing forward witnesses; or
5. maintain the smooth operation of the market,

while also considering the potential prejudice that may be caused to subjects of the investigation.

The Enforcement Guide (both the previous and updated versions) also notes that "exceptional circumstances" may arise where matters under investigation have become the subject of public concern, speculation or rumour, and the FCA considers an announcement may help to allay concerns or quash rumours.

Has the test for opening an investigation changed?

The Enforcement Guide does not contain any formal changes to the FCA's criteria for opening an investigation. However, as was also noted in the FCA's Consultation Paper CP24/2 regarding revisions to the Enforcement Guide, the Policy Statement accompanying the Enforcement Guide states that the FCA has raised the bar for opening an investigation and has strengthened its pre-investigation assessment processes.

The Policy Statement notes that these changes have resulted in fewer and faster investigations, and that the FCA has made regular use of supervisory intervention powers that do not involve enforcement investigations.

Which other changes has the FCA made in the revised Enforcement Guide?

The FCA has taken the opportunity to streamline the Enforcement Guide considerably, in line with its commitment to "smart" and efficient regulation. It has removed over 250 pages from the previous version. This has included deleting some sections that are duplicative of statements of policy or procedure already set out in the Decision Procedure and Penalties Manual and wording that repeats legislation. Some sections relating to the exercise of supervisory functions have been moved to other parts of its Handbook (principally to the Supervision manual).

In amending the Enforcement Guide the FCA made changes and clarifications to certain policies and procedures:

1. Provision of firm-commissioned reports on a limited waiver basis – the FCA has made clear that it will accept reports over which privilege is asserted, without agreeing the fact or extent to which they are legally privileged. This is not a change in approach, but simply an explicit clarification of the FCA's approach on this issue.
2. Attendance of legal advisers at compelled interviews – the FCA has indicated that an interviewee can be accompanied by their legal adviser, but in rare cases and considering all the relevant circumstances of the case, the subject(s) of the investigation and the interviewee's wishes, the FCA may refuse attendance of a particular legal adviser where the adviser's attendance may prejudice the investigation. By way of example of a situation in which it considers such prejudice may arise, the FCA cites circumstances in which an advisor acts for multiple parties under investigation, which, it states, may impact the extent to which a witness feels able to answer questions candidly. In making this clarification, the FCA has acknowledged feedback from respondents to its consultation on the revised Enforcement Guide, that (i) there were benefits to legal advisers acting for multiple parties, (ii) advisers are under professional obligations to avoid conflicts of interest and (iii) that there were good reasons why a person may want a particular legal adviser to attend. The FCA has concluded that while it is for firms to assess whether they may have a conflict, it is for enforcement case teams to consider when attendance by a particular legal adviser could prejudice an investigation.
3. Decision-making authority in relation to the commencement of civil and criminal proceedings – the range of individuals who may make these decisions has been expanded from only Executive Directors to also include Directors of Enforcement. However, the FCA has indicated that decisions about commencing criminal proceedings will still typically be made by an Executive Director.
4. Scoping meetings – noting that not all subjects of investigations always wish to have a scoping meeting, the FCA has indicated that these will now take place if requested rather than by default.
5. Private warnings – noting that it has not used private warnings for some time, the FCA has confirmed that reference to these has been removed from the Enforcement Guide as it no longer intends to use private warnings as an enforcement tool. The FCA explained the objectives of a private warning could be met through communicating issues and suggestions for redress to the relevant firm or individual. It also clarified that the removal of private warnings would not affect the type of cases it would refer to Enforcement and investigate, nor would it impact the FCA's speed of resolution or closing of investigations, where appropriate.

One change that was proposed by the FCA during its consultation but was ultimately rowed back on in the revised Enforcement Guide was its proposal not to consult on future changes to the Enforcement Guide. In the Policy Statement accompanying the release of the revised Enforcement Guide, the FCA has confirmed it will not now go ahead with this proposal, acknowledging feedback on the desire for greater certainty about when it will consult and concerns about transparency around proposed changes. The FCA has confirmed that it will retain its current practice of consulting on all changes to the Enforcement Guide.

What is the FCA's current approach to enforcement investigations?

The revisions to the Enforcement Guide demonstrate the FCA's focus on transparency and simplification of its enforcement approach. The changes give effect to its objective of balancing economic growth with consumer protection and stable and well-functioning UK markets, which senior figures within the FCA have clearly and frequently communicated.

The Enforcement Guide has been updated against a backdrop of (and in support of) the FCA pursuing fewer and faster enforcement investigations. The FCA's accompanying press release points to some success in this regard, with a 35 per cent reduction in the number of open investigations since 1 April 2023 and notes that five recent investigations concluded in less than 16 months (compared to an average length of 42 months in 2023/24).

The FCA remains committed to a selective approach, reserving enforcement action for cases it considers to be particularly serious and/or in which it considers it necessary to send a deterrent message in line with its strategic priorities. This does not mean an overall reduction in activity. It continues to make extensive use of supervisory powers, for example to require periodic provision of data and/or adjustments to particular aspects of firms' compliance systems and controls in cases where it decides not to commence an enforcement investigation.