UK Financial Conduct Authority Seeks Further Views On Enforcement Transparency Proposals

The further consultation also aims to assist ongoing parliamentary scrutiny, including by the Commons’ Treasury and Lords’ Financial Services Regulation Committees.

New data released by the regulator shows the pace of investigations accelerating, including a number of investigations which took 16 months or less to complete. By providing data and case studies, as well as further detail on the public interest test, the regulator is sharing greater clarity on how decisions on announcing investigations could be made - if the changes go ahead.

Four significant changes have been made to the FCA’s proposals in response to feedback:

• The potential negative impact on a firm would be explicitly considered as part of a public interest test - previously it wasn’t included as one of the factors.
• Firms would be given 10 days’ notice ahead of any announcement being made, rather than the 1 day originally consulted on. During this period, firms could make representations. If the FCA decides to announce, firms would then have an additional 48 hours’ notice before it is published.
• The potential for an announcement to seriously disrupt public confidence in the financial system or the market has also been included as a new factor in the public interest test.
• The FCA has clarified it won’t announce investigations which began before any changes to the policy come into effect. (Although it may reactively confirm investigations which are already in the public domain, where this is in the public interest).

It is anticipated that if the proposals were to come into effect, they would only lead to additional proactive announcements of investigations into regulated firms in a very small number of cases.

Steve Smart, joint executive director of enforcement and market oversight, said:

'We have made good progress in increasing the focus and pace of our enforcement work - so that we can prioritise the investigations most likely to drive meaningful deterrence across industry and deliver more timely outcomes. We want to hear further views on whether some increased transparency could work in practice.'

Therese Chambers, joint executive director of enforcement and market oversight, said:

'We have heard the strength of feedback to our original proposals, and we are making changes as a result. We hope the greater detail published today supports the further engagement we hope to have on the proposals, before we make any final decisions.'

Feedback to the first paper closed on 30 April. The FCA has continued to extensively engage with a wide range of stakeholders and is now seeking views on how the public interest test could work in practice, based on more detailed criteria and data.

It will continue to meet with firms, trade associations, consumer groups, the legal community and others. The FCA Board is then aiming to make a final decision in the first quarter of 2025.

Background

1. Read CP24/2, Part 2: Greater transparency of our enforcement investigations.
2. This proposal forms part of the FCA’s wider reforms to enforcement - where it is aiming to increase the pace and focus of its investigations.