UK Financial Conduct Authority publishes its revised Enforcement Guide

The changes to the ENFG do the following:

1. Revise the FCA’s policy on announcing enforcement investigations.
2. Clarify FCA policy in other areas.
3. Streamline content.

In this article we look at the key changes in each of these three areas.

i.           Announcing enforcement investigations

The FCA confirms that it is not changing the test to announce the opening of an enforcement investigation into a regulated firm from its “exceptional circumstances” test to a public interest test.  The FCA’s position follows a long period of engagement with stakeholders, and “strong opposition” from the FS industry.  The FCA’s final stance reflects the approach it had outlined in its letter to the Treasury Select Committee in March 2025. (See our article here).

The ENFG now provides for three situations in which the FCA may announce an investigation. The FCA will be able to:

• Announce and name the subject of an investigation into suspected unauthorised activity or criminal offences relating to unregulated activity.
• Reactively confirm that it is investigating in limited circumstances.
• Share information on an anonymised basis.

The FCA is maintaining its approach to individuals, which is that it will not generally announce when it has opened an investigation into an individual

Looking at each of these three situations in turn:

Unauthorised activity

The FCA may announce and name the subject of an investigation into suspected regulated financial services or other activities, including financial promotions, which are carried out without appropriate authorisation, approval or registration (“unauthorised activities”) or criminal offences relating to unregulated activity.  These tend to be investigations where the FCA has concerns about consumer harm and where the FCA generally has no supervisory, intervention or oversight powers to protect consumers.

The FCA has added a definition of “unauthorised activity” to its Handbook Glossary, as an activity in breach of section 21 of the Financial Services and Markets Act 2000 (“FSMA”) or carried out in breach of a statutory requirement to be authorised or registered with the FCA or Prudential Regulation Authority.

The FCA may announce an investigation falling into this category where it considers it is desirable to:

• Warn or alert consumers or investors.
• Help the investigation itself, for example to bring forward witnesses.

The FCA concedes that there may be some limited circumstances where it is necessary for it to name an individual under investigation, for example where an individual holds themselves out to be a firm.

Reactive announcements

The FCA will only reactively confirm that it is investigating a named subject where the fact of its investigation has been made public by:

• The investigation subject itself, or an affiliated company.
• A regulatory, government or public body.

The FCA envisages that an announcement of this kind is likely to be a confirmation statement on its website, or by its press office, or in response to a parliamentary request for information, and any information that it would share would not typically go beyond what is already in the public domain.

Anonymised announcements

The FCA will announce an investigation, without naming or otherwise identifying the investigation subject, only where it is desirable:

• For the purposes of education.
• To encourage compliance with its rules or requirements.

The FCA says that it is exploring ways of sharing information on the themes and trends in its enforcement work on a general basis, and that it might also make anonymised announcements about particular investigations.

Decision making, timings and process

The FCA’s revised policy on announcing investigations will apply to all the FCA’s investigations started on or after 3 June 2025.

The FCA will consider whether to share information about an investigation at the start of the investigation and, where it does not share information at that point, it will revisit the decision at regular points. At what point the FCA decides to say anything publicly about an investigation will depend on the particular case, as will the form in which the information is shared. 

All decisions relating to enforcement investigation publicity will be taken by an Enforcement Executive Director. The potential prejudice that may be caused to the investigation subject will be considered. A proposed announcement may be discussed with the investigation subject to inform the FCA’s considerations. The FCA also recognises that there will be instances when it would not share any information because of potentially serious impacts on wider financial stability or negative market impact. 

When considering an anonymised announcement, the FCA will take all reasonable steps to ensure the investigation subject cannot be identified and whether the announcement, although anonymised, may negatively affect firms of that relevant type or sector.

Any announcement will be subject to all applicable statutory provisions, such as the restriction on disclosing confidential information in section 348 of FSMA and restrictions imposed by data protection legislation.

The FCA will report annually on the number of cases where it shares information about an investigation and then takes no further action.

ii.           Clarifying FCA policy

Other changes to the ENFG seek to clarify and codify FCA policy in certain areas.

Accepting privileged materials on a limited waiver basis

The ENFG has been revised to provide that the FCA will accept investigation reports or other materials on a limited waiver of privilege basis but without agreeing the fact or extent to which they are legally privileged. The FCA says that this is not a change in its approach, but makes it clearer that this is its general approach to the issue.

The FCA reminds firms that it is subject to strict statutory restrictions on the disclosure of confidential information (section 348, FSMA), breach of which is a criminal offence (section 352, FSMA), hence information provided to the FCA may come under this protection.

Attendance of legal advisers at compelled interviews

The ENFG has been amended to now expressly state that, depending on the particular facts of the case, the FCA may refuse the attendance of a particular legal adviser at an interview where it may reasonably be assessed as potentially prejudicing the investigation or any other ongoing investigation, for example, where that legal adviser has a conflict of interest or owes a duty of disclosure to another person (including the interviewee’s employer).

Commencement of civil and criminal proceedings

The decision to start proceedings can now be made by Directors in Enforcement, as well as Executive Directors (who hitherto exclusively made such decisions) in order to provide flexibility at an appropriate level of seniority - although the FCA says that it expects that criminal prosecutions will continue to be made at Executive Director level.  Who makes the decision will depend on the nature of the case.

Scoping meetings

The FCA has clarified its approach to scoping meetings in the ENFG by saying that it will determine, on a case-by-case basis, whether to hold scoping discussions with the firm but will generally do so when specifically requested. Where scoping meetings are appropriate, they will normally be held close to the start of the investigation

Private warnings

The FCA has deleted all references to private warnings in the ENFG, and will no longer use them. Private warnings were used to make a firm or individual aware that the situation in which they were involved was sufficiently serious for the FCA to consider a disciplinary sanction, even though it had not made a formal decision to do so.  They were not a statutory tool but their use arose out of practice.  The FCA says that it has not used private warnings for some time, and that the same objectives can be met through communicating issues to the relevant firm or individual through correspondence, which is what the FCA has done over the past few years.

iii.           Streamlining the ENFG

Over the years, material had been added to the ENFG incrementally. It had grown to over 300 pages and, as such, had become cumbersome and unfocused.  The FCA recognised that it needed an overhaul in order to make it more streamlined and concise.

The FCA is deleting from the ENFG any duplication with other areas of its Handbook, namely DEPP, or with legislation.  It is removing content not focused on enforcement, or moving this content to a more suitable place, such as moving any high-level information on its enforcement approach to its website where it is more accessible to users and is easier to update and maintain, and moving content relating to the FCA’s supervisory powers to SUP (with a note that these powers may be used in an enforcement context).

Commentary

The FCA says the various changes to its ENFG, particularly those which eradicate duplication and streamline content, have reduced it by over 250 pages, making it a more user-friendly resource. The changes which bring the ENFG into line with FCA general practice provide helpful clarify. 

It will be interesting to see how the changes to the FCA’s policy to announce enforcement investigations play out in practice and whether, in the case of anonymised announcements, they will be a useful tool for firms in terms of educating them about FCA expectations and encouraging compliance with rules.  Firms should bear in mind that, if they disclose an investigation themselves (e.g. in their accounts) or it is disclosed in some other way, a reactive announcement by the FCA of that investigation may follow.  Although the FCA has said that its announcement will not typically say any more than what is already in the public domain, it may, however, attract more media interest and speculation.

As previously confirmed by the FCA, it is not changing the test to announce an investigation into a regulated firm apart from in “exceptional circumstances” due to strong opposition to its proposals to instead employ a public interest test. However, it will be interesting to see if the FCA is inclined to deploy its “exceptional circumstances” test more readily in future investigations.

Authored by Daniela Vella and Elaine Penrose.