Following considerable backlash from the City and government officials over its controversial plan to publicly “name and shame” companies and its subsequent revision of those proposals, the FCA has now set out its final position on investigations into UK regulated and listed firms in the updated and significantly streamlined Enforcement Guide. The changes, which come into force immediately, aim to increase transparency in specific investigation scenarios while simultaneously improving the pace and focus of the FCA’s enforcement actions.

One of the key takeaways from the updated guide is the FCA’s decision to retain the “exceptional circumstances” test for announcing investigations into regulated and listed firms. This means that for the majority of investigations into established entities, the FCA will continue to exercise discretion in publicizing ongoing probes, reserving announcements for situations deemed genuinely exceptional.

However, the FCA has identified three specific situations where there was broad support for increased transparency, and where public announcements will now be more likely:

• Suspected unauthorized financial services or offence related to unregulated activity: Where the FCA is investigating suspected unauthorized financial services, or a suspected offence relating to unregulated activity, an announcement will be made if it can warn consumers or investors, or if it will aid the investigation itself. This reflects the FCA’s commitment to consumer protection, especially in areas where the public may be unknowingly exposed to risk.
• Public disclosure by subject or affiliates: If the fact of an investigation has already been made public by the subject firm, an affiliated company, or by another regulatory body, government, or public body, the FCA will now also make an announcement. This aims to ensure consistent and accurate information is available to the market.
• Anonymized announcements for education: In cases where it would be helpful to educate the public on the types of misconduct the FCA is investigating, anonymized announcements – not naming or identifying the subject of the investigation – may be made. This approach seeks to raise awareness about prevalent issues without prejudicing specific cases.

It is important for firms to note that these changes will only apply to investigations launched on or after June 6, 2025. Investigations already underway will continue under the previous guidelines.

Beyond the specific criteria for announcements, the FCA has reiterated its commitment to significantly improving the pace and focus of its investigations. This pledge is backed by recent data highlighting a dramatic reduction in investigation timelines. The FCA reported that five recent investigations concluded with a public outcome in less than 16 months, a stark contrast to the average length of 42 months in the 2023/24 financial year.

Further practical changes include a substantial streamlining of the Enforcement Guide itself, with content reduced by over 250 pages, removing duplication and making it more user-friendly. The FCA has also confirmed its commitment to continuous improvement, pledging to consult on any future changes to the Enforcement Guide.

Stakeholder views

So does the updated and slimlined Enforcement Guide signal a more transparent and agile approach to enforcement from the FCA? We sought some industry comment.

The FCA is listening

John Higgins, CEO at Pathlight Associates, said: “The FCA has listened to industry, and the final proposals around transparency and enforcement are more limited than what was initially proposed. The new, narrowly-drawn scenarios where greater disclosure is allowed should give firms more certainty than the ‘public interest’ test, while also ensuring that the regulator can proactively prevent consumer harm.”

Billy Bradley, a financial services partner with law firm CMS: said: “This is a sharp retreat from the FCA’s original ‘name and shame’ proposals. We’re effectively back to the status quo, with a few additional limited exceptions that were broadly accepted as uncontroversial amidst the widespread opposition. The FCA has clearly listened and opted for a more balanced and proportionate approach.”

Katie Stephen, partner and London Co-Head of the Contentious Financial Services Group at Norton Rose Fulbright agreed: “Many will see the ‘name and shame’ reversal in position as a rare success story for industry push-back, which may embolden future challenge.”

Increased transparency explained

The “exceptional circumstances” test remains for many regulated firms. However, the clearly defined scenarios for increased transparency, coupled with the commitment to faster investigations, could offer UK financial services firms a clearer understanding of the enforcement process.

Stephen explained how it could work: “Obtaining anonymous details about investigations could help firms to avoid pitfalls, if enough information is provided, but a balance needs to be achieved so as not to give away the identity of the subjects and lead to unhelpful speculation. Senior managers will need a process for identifying lessons learned and any actions they need to take in their areas of the business, as failing to do so will be treated as an aggravating factor if any similar issues are uncovered in the future.   

“Individual cases of bad behavior and associated firm-related failings remain on the regulatory agenda for investigation and potential enforcement action, particularly if the FCA is speeding the process up and making inroads into the backlog of historic cases. Some recent outcomes demonstrate that the FCA is still keen to make examples of individuals falling below its standards.”

Fewer investigations come with greater risks

“The FCA has confirmed that it now has fewer open investigations,” said Stephen. “This is a double-edged sword for firms in that they are less likely to be investigated but more likely to face an outcome if they are. There may also be a greater risk of a public supervisory intervention if the FCA seeks to take action – and makes this public – at an earlier stage when concerns are identified. It puts the emphasis for firms firmly on compliance and prevention, so as to avoid being dragged into the spotlight. 

“Senior managers will need to consider that, if the current approach to enforcement does not work as a deterrent,the pendulum could swing back as it did following the global financial crisis. That could mean more investigations and ultimately more visible and severe penalties for both firms and individuals.”