Greater transparency of Financial Conduct Authority (FCA) enforcement investigations: the FCA abandons proposals to “name and shame” regulated firms

Following extensive consultation with industry, and head-on engagement with Parliament, the FCA has announced that it has abandoned its proposals of February 2024 (CP24/2), subsequently modified in November 2024 (CP24/2 Part 2), to publish the opening of enforcement investigations into regulated firms carrying out authorised activity.

It remains to be seen to what extent the FCA’s determination to achieve greater transparency around its enforcement activity will still inspire its approach to publication.

The FCA’s initial proposals

In February 2024¹, the FCA initially proposed routinely to publish the opening of an investigation, when that was deemed to be in the public interest, and if there was no compelling legal or other reason not to do so. 

This represented a significant departure from existing practice, and stimulated a broad range of responsive concerns, including:

• The disproportionate effect that announcement of an investigation would have on a regulated entity subsequently cleared of any wrongdoing; and
• The lack of detail around the public interest framework identifying factors for and against publication, and the apparent failure of that framework to acknowledge the impact of publication on the investigation subject. 

For more information, including our views on the proposals’ implications for auditors, please see our previous article here.

13 November 2024 – FCA evidence to the Financial Services Regulation Committee

On 13 November 2024, the Chair and the Chief Executive of the FCA gave evidence to the Financial Services Regulation Committee (FCA enforcement guidance consultation) on the subject of the FCA’s proposals². The Committee introduced the proposals as having been described as a “naming and shaming initiative”.

One of the questions put to the FCA by the Committee was this: “… when you decide to initiate the investigation, you may not actually have much in the form of evidence, and that the reason you disclose the investigation publicly is in the hope that you will get some evidence to justify your action. That is a concern that has been expressed to us, and I have that concern as well, because there is a sort of smack of unfairness about the process, especially if, as we know and I think you accept, two-thirds of the investigations that you instigate come to nothing.”³ 

The FCA’s response was that it would not be expecting to announce every investigation, and it stated that of the approximately 47 investigations open as at November 2024, 27 were already in the public domain, of which only 8 had been disclosed by the FCA, the balance having been disclosed by the firms themselves. The FCA clarified that it had in mind what it described as “incremental transparency” in relation to possibly 2 to 3 firms per year. The FCA did not address the issue of unfairness in its response to the Committee.

28 November 2024 – FCA’s modification of its proposals

On 28 November 2024⁴, the FCA set out four changes to its initial proposals, for further consultation. In summary, the four changes were:

• including within its public interest framework of factors to test for and against publication, consideration of the impact of the announcement of an investigation on a firm;
• giving firms a copy of any draft announcement and 10 business days’ notice to make representations to the FCA, with a further 2 business days’ notice of publication of any announcement, if the FCA decide to proceed after taking those representations into consideration. Previously, the FCA’s proposals had only afforded firms 1 business day’s notice of the intended announcement; 
• including as a new factor in the public interest framework, consideration of the potential for an announcement to seriously disrupt public confidence in the financial system or the market; and
• clarifying that the FCA would not make proactive announcements of investigations which were already ongoing when any proposals came into effect, albeit the FCA may reactively confirm ongoing investigations which were already in the public domain where this was in the public interest. 

The FCA provided case studies to demonstrate its intended approach to the application of the public interest test. 

• British Steel Pension Scheme (BSPS)

The FCA noted that in relation to the ongoing BSPS scandal, where a large number of British Steel workers were given purportedly inadequate pension transfer advice, it  made public that it had opened a large number of investigations but did not name any of the affected firms. By announcing investigations earlier into named firms, the FCA believed that it could have alerted BSPS members to potential problems with the advice they had been given, thereby preventing consumer harm. 

• Citigroup Global Markets Limited (CGM)

In 2022, CGM was identified as responsible for a ‘flash crash’ in trading that disrupted several European stock markets. The FCA opened an investigation and subsequently fined CGM £27.7m for insufficient controls in 2024. The FCA believes that the publication of the opening of its investigation closer to the key incident may have reassured investors that the FCA was investigating and so may have helped to maintain trust and confidence in the markets. 

• PricewaterhouseCoopers LLP (PwC)

In 2021, the FCA opened an investigation into PwC over its disclosures to the FCA in its capacity as auditor of London Capital & Finance (LC&F). In 2024, the FCA fined PwC £15m for alleged failures in fraud reporting. The FCA noted that it received significant public scrutiny in relation to LC&F and requests for information abouts its regulatory response from parliamentary committees. In the FCA’s view, announcing this investigation could have allayed those concerns, albeit it noted it was unlikely that it would have needed to announce the start of the investigation. 

• CB Payments Limited (CBPL)

CBPL is part of the Coinbase Group, a cryptocurrency trading platform. The FCA opened an enforcement case in 2020 concerning CBPL’s acceptance of “high-risk” clients, leading to a £3.5m fine in respect of control failings in July 2024. Given the relative immaturity of the crypto-asset market at the time, the FCA considered that a public announcement of the commencement of its investigation would have been in the public interest and would have helped deter wider misconduct in the crypto ecosystem. 

Notably, the FCA did not include any examples of instances which would not (in its view) have merited publication, only acknowledging in the PwC case study that publication would not have been required at the onset of the investigation.

March 2025 – looking ahead

On 11 March 2025, three weeks after closure of consultation on CP24/2 Part 2, the FCA has announced that it has abandoned its publication proposals, in the face of largely opposing industry feedback. 
The FCA will adhere to its existing approach of publication only in exceptional circumstances, but it will publish more detail of issues under investigation on an anonymous basis.

Commentary 

Through the year-long turbulence of its proposals, the FCA has sought to strike a balance between stressing that its proposals would only impact a very small number of firms and advocating for the importance of greater transparency around the FCA’s regulatory role. 

The FCA’s decision to default to its existing approach to publication has been made following strong industry backlash and also in the wider context of the Government’s drive for economic growth.

It remains to be seen whether the FCA’s professed desire for increased transparency will, despite abandonment of its formal proposals, still infuse its approach to publication. Specifically:

• what the FCA will characterise as “exceptional circumstances”, and whether it will move to a less restrictive interpretation of that than previously;
• what the FCA will characterise as being “in the public domain”, thus justifying reactive confirmation of investigation;
• what the form and content of reactive confirmation will take; and
• the extent to which any affected firm will be able to make representations in relation to any of the above.

¹CP24/2

²committees.parliament.uk/oralevidence/14996/pdf/

³Ibid Lord Grabiner, page 5

⁴CP24/2 Part 2