UK Conduct Authority Consults on New Approach to Enforcement and Publication of Enforcement Investigations

On February 27, 2024, the U.K. Financial Conduct Authority published a consultation on revisions to its Enforcement Guide, setting out proposals which aim to simplify the guidance and increase transparency around the FCA's enforcement actions. Responses to the consultation may be submitted until April 30, 2024.
 
The FCA is proposing to publicize its investigations of firms at an earlier stage, including when they are opened, and the progress made on an investigation. If it is in the public interest, the identity of the subject of the investigation will also be published, but this will not include investigations relating to individuals, the opening of which will typically not be publicized unless doing so is necessary in the public interest (e.g., encouraging witnesses to come forward). Decisions on whether and what to publish in relation to a firm will be taken on a case-by-case basis, in consultation with a new public interest framework. Factors indicating that an announcement is in the public interest will include the likelihood that the announcement will: (i) protect the interests of potentially affected customers, consumers or investors; (ii) support the investigation (e.g., by encouraging whistleblowers); (iii) address public speculation; or (iv) otherwise enhance one of the FCA's statutory objectives, which include protecting and enhancing the integrity of the U.K. financial system. The proposed approach will apply to all investigations begun by statutory appointment of investigators, including any that are underway when the new policy comes into force. Private warnings which could be given to firms, approved persons and those subject to the Code of Conduct (COCON) section of the FCA Handbook (e.g., senior managers and certain employees of firms subject to the senior managers and certification regime)will no longer be given. The FCA considers it should not use private warnings where it cannot be more be transparent publicly.
 
Other proposed changes to the FCA's Enforcement Guide include rationalizing the guide to remove content which repeats provisions of the Financial Services and Markets Act 2000 or other legislation or regulatory rules, while retaining explanatory content, and moving some content into other rulebooks where appropriate. The FCA is also proposing to move information about its strategic approach to enforcement out of its Enforcement Guide and onto its website to improve accessibility. Clarifications will be made to the Enforcement Guide's description of the FCA's powers when conducting an enforcement investigation. Powers to apply to the court to commence civil or criminal proceedings will be extended to Directors in Enforcement (in addition to Executive Directors who currently have these powers). The FCA hopes to speed up is investigations with a streamlined caseload focusing on consumers needs and dealing with market abuse and financial crime.