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The Financial Conduct Authority (FCA) is the regulator for UK financial services. In addition to its oversight and supervisory function, its enforcement department has wide-ranging investigative and prosecutorial powers and regularly brings actions against individuals and firms for misconduct, disciplinary breaches and financial crimes.
Previously considered to be a relatively ‘hands off’ regulator, the FCA has, over recent years, become more pro-active. It regularly brings regulatory enforcement proceedings and is becoming increasingly forthright about its use of criminal prosecution powers. It has wide ranging powers to compel individuals and companies to attend interviews and produce information.
Hickman & Rose’s FCA investigations solicitors are highly experienced in representing individuals and organisations under investigation by the FCA, particularly when these allegations intersect with parallel probes by agencies such as the SFO, FRC, SECC and DoJ.
Our team of expert FCA solicitors have the skills and experience to navigate safe passage through what can sometimes be a bewildering legal environment and in doing so, protect our clients’ assets, reputations, and liberty.
As the successor agency to the Financial Services Authority (FSA), which was dissolved in 2013, the Financial Conduct Authority regulates 51,000 financial services firms in the UK. It often works in tandem with the Prudential Regulation Authority (PRA).
The firms the FCA regulates include banks, building societies, mortgage lenders, pensions and insurance providers, fintech companies, finance and investment advisors and claims management firms.
The FCA’s work is defined by the Financial Services and Markets Act 2000 (FSMA). The agency’s stated aim is to ensure financial markets operate in an “honest, fair and effective” manner in order that “consumers get a fair deal”.
The FCA investigates a wide range of criminal and regulatory offences. These include – but are not limited to – market abuse, market manipulation, insider dealing, fraud, breach of the Principles and systems and controls, and offences under the Financial Services and Markets Act 2000.
It has its own expert financial crime, intelligence and whistle-blowing teams and works closely with other regulators and law enforcement agencies, both in the UK and abroad. These include the SFO and DoJ.
The FCA has extensive evidence-gathering powers under the Financial Services and Markets Act 2000 which can be used to compel firms and individuals to provide the FCA with information and to attend interviews.
An FCA regulatory investigation starts when its Enforcement and Market Oversight division appoints investigators to a case.
At this stage, the FCA may send a Notice of Appointment of Investigators and Memorandum of Appointment letter to the relevant firm or individual. However, it may not do this if it considers doing so may prejudice its ability to conduct the investigation effectively.
Following the appointment of investigators, there will, in most cases, be a “scoping meeting” between these investigators and the relevant firm or individual which sets out the investigation’s basic parameters, including whether or not a compelled interview will be required.
Once it has completed its investigation, the FCA usually sends a Preliminary Investigation Report (PIR) to the relevant firm or individual. This sets out those facts the investigators consider to be relevant to the matter and invites the firm/individual to confirm they are accurate, or to provide further comment, usually within 28 days.
Having received a response to its PIR, the FCA may decide to take no further action. Alternatively, it may conclude there is a case for serious misconduct and make a recommendation that enforcement action be taken.
If the FCA recommends further action (and the matter is contested) then the case will be referred to a “decision maker” for determination. The decision maker must be separate to, and not directly involved in, the investigation itself. It is most commonly the Regulatory Decisions Committee (RDC).
If the RDC decides to proceed with a case, the investigation may be made public at this stage and a Warning Notice published on the FCA’s website. The subject of proposed enforcement is invited to make written representations to the RDC, after which the FCA will give a written report, before the case proceeds to an oral hearing.
The RDC then makes a determination. There is wide range of potential sanctions. These include public censures, suspensions, restrictions on carrying out business, financial penalties or fines, and/or prohibition from carrying out regulated activities either indefinitely or for a fixed period.
The RDC must also decide whether or not to issue a decision notice recording its final determination, which is also published to the FCA’s website.
In addition to is regulatory powers, the FCA can, under the Money Laundering Regulations (2007) bring criminal prosecutions for breach of the Money Laundering Regulations.
The FCA achieved its first successful criminal prosecution under MLR in December 2021 when NatWest pleaded guilty to three charges and paid a fine of £264m. The FCA’s leadership has frequently spoken about its desire to make more of its criminal prosecution powers.
Some of the FCA’s investigations may start as “dual track” criminal and regulatory investigations, with a decision on whether they end up being prosecuted through the criminal courts, or at the RDC, being determined in the light of the gathered evidence.
Hickman & Rose has extensive experience and success in FCA investigations. The firm has represented traders, investment bankers, senior management in financial institutions, hedge fund managers and investors, in some of the most complex and significant investigations conducted by the FCA to date. The Hickman & Rose team has a particular specialism in advising on investigations that have a multi-jurisdictional element, for example with the DoJ or SECC. The team is also used to advising upon joint investigations by the FCA and PRA.
Being subject to an FCA investigation can be a gruelling experience. Hickman & Rose’s expert lawyers understand the personal and professional impacts of this, and work swiftly to assess the scope of the investigation, the complexities of the underlying facts and to provide technical and strategic advice with the aim of bringing the matter to the best possible outcome.
11 May 2022
The Cum-Ex scandal has prompted criminal and regulatory investigations – and civil law actions – around the world. In a blog, Olivia Dwan and Ben Rose analyse how these are impacting individuals.
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21 Mar 2022
As the Financial Conduct Authority uses its powers of criminal prosecution for the first time in a money laundering case against NatWest, Olivia Dwan, barrister in our Business Crime department, sets…
4 Jan 2022
Corporate and White Collar crime partner Ross Dixon has contributed to a Bloomberg article analysing the SFO’s record of success – and failure – in recent fraud and bribery matters.
Published soon…
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