Expert FCA Investigations Solicitors

The Financial Conduct Authority (FCA) the UK’s main financial services regulator. It has wide-ranging investigative and prosecutorial powers which it can use against individuals and firms it suspects of misconduct, financial crime, or disciplinary breaches.

Once considered a relatively ‘hands off’ regulator, the FCA has in recent years become much more pro-active. Its enforcement division regularly brings regulatory proceedings and is becoming increasingly forthright in its powers of criminal prosecution.

The FCA has significant powers. It can compel individuals and companies to attend interviews and produce information. In regulatory proceedings there is no right to silence. Anyone who is – or suspects they may become – the subject of an FCA investigation is advised to seek expert legal advice.

Hickman & Rose’s team of expert FCA lawyers are highly experienced at representing individuals and organisations under investigation by the FCA, particularly when these allegations intersect with probes by agencies such as the SFO and the FRC in the UK, or the SEC and DoJ in the US. Our specialist FCA investigations team know how to navigate what can seem a bewildering legal environment in a way that seeks to protect clients’ assets, reputations, and liberty.

The FCA's roles and responsibilities

The FCA exists to ensure the UK’s financial markets operate in an ‘honest, fair and effective’ manner in order that ‘consumers get a fair deal’.

To do this the agency oversees the behaviour of nearly 60,000 financial service organisations. These include most of the UK’s banks, building societies, mortgage lenders, pension and insurance providers, fintech companies, finance and investment advisors and claims management firms.

But the FCA doesn’t just regulate corporate bodies. Under its Approved Persons and Senior Managers and Certification regime, the agency also regulates the behaviour of many of the most senior individuals in these organisations.

The FCA’s enforcement division is concerned with investigating, and prosecuting, a wide range of criminal and regulatory offences. These include – but are not limited to – market abuse; market manipulation; insider dealing; fraud; breaches of FCA Principles for Businesses and Code of Conduct, systems and controls; and offences under the Financial Services and Markets Act 2000 (FSMA 2000).

The agency 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.

The FCA Investigation Process

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.

Having appointed an investigation team, the FCA usually organises a ‘scoping meeting’ between the investigators and the relevant firm or individual. This is where investigation’s basic parameters are set out, including whether the FCA intend to hold a compelled interview, what documents are required, and the general timetable.

Once it has completed its investigation, the FCA usually sends a Preliminary Investigation Report (PIR) to the relevant firm or individual. This PIR sets out the facts which the FCA investigators consider to be relevant to the matter and invites the firm or individual to confirm they are accurate, or to provide further comment, usually within 28 days.

Having received a response, the FCA may decide to take no further action, at which point the investigation process ends. Alternatively, it can conclude there is a case for serious misconduct and recommend enforcement action.

If the FCA recommends further action (and the matter is contested) then the case is referred to ‘the Regulatory Decisions Committee (RDC).

The Regulatory Decisions Committee

The FCA’s Regulatory Decisions Committee (RDC) operates with its own legal advisers and support staff. Any decision by the RDC to proceed with an enforcement case marks a new stage in an FCA investigation.

It is at this stage that news of the investigation will usually be made public, normally with a Warning Notice published on the FCA’s website. It is also at this stage that the subject of the proposed enforcement is invited to make representations to the RDC. Representations can be written or oral and in person at a meeting which has similarities to a court hearing.

The RDC will then decide whether to issue a decision notice. It has a 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 decision notice can be challenged in which case a referral is made to the Upper Tribunal. The firm or individual can, if they wish, have the matter dealt with by the Upper Tribunal without making oral representations to the RDC.

Criminal Prosecutions

In addition to its powers of regulatory enforcement, the FCA is able to bring criminal prosecutions in the criminal courts. Historically, the FCA has not made as great use of these and prefers to use its regulatory power instead. But this has changed over recent years.

The agency has prosecuted a number of for insider dealing offences under the Criminal Justice Act 1993. Recent examples include compliance officer Fabiana Abdel-Malek and day trader Walid Choucair, both of whom were sentenced to three years’ imprisonment.

In December 2021 the FCA achieved its first successful criminal prosecution under the Money Laundering Regulations when NatWest pleaded guilty to three charges and paid a fine of over £264m. One of Hickman & Rose’s current business crime team was the FCA’s junior counsel throughout that case.

The FCA employs a dedicated team of criminal lawyers. Whilst it undertakes fewer high-profile prosecutions than the SFO, it enjoys a reputation as a thorough and successful prosecutor. The FCA’s leadership has spoken frequently about its desire to make more of its powers of criminal prosecution, and we expect that to continue.

An FCA criminal prosecution need not necessarily start as such. 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, determined in the light of the gathered evidence.

The often-complex interplay of criminal and regulatory factors in FCA matters means that anyone who is – or fears they may be – subject to an investigation should seek advice from a law firm with expertise in both areas of law.

Frequently Asked Questions

Below are answers to some of the most frequently asked questions relating to FCA investigations.

I’ve received a Notice of Appointment of Investigators from the FCA. What should I do?

Usually accompanied by a Memorandum of Appointment, a Notice of Appointment of Investigators is sent by the FCA to the subject of a criminal or regulatory investigation. The letter sets out why the FCA has opened its investigation and explains the statutory basis for doing so.

The letter does not normally require an immediate response from its recipient. However, it can often be beneficial to their case for the subject to swiftly engage lawyers to liaise with the FCA and advise upon the letter’s content. Any information that is provided to the FCA can be used as evidence in the investigation.

FCA investigations can sometimes start due to a misunderstanding. In such cases, an investigation can sometimes be brought to a swift conclusion with appropriate legal engagement.

Will I be told the FCA is investigating me?

In most cases, the subject of any FCA investigation will be informed of this fact via a Notice of Appointment of Investigators and/or a Memorandum of Appointment letter.

But this is not always the case. The FCA is able to carry out the initial stages of an investigation in secret if it feels that making the subject aware of its actions could potentially prejudice its investigatory abilities.

Depending on the circumstances of the matter, it may be possible for the subject of any active investigation to force the FCA to disclose this fact.

In any case, any individual who is, or suspects they may be, under FCA investigation is advised to seek specialist legal advice as soon as possible.

Can the FCA force me to give an interview or hand over evidence?

The FCA has extensive powers to compel individuals and companies to attend interviews and produce information. It makes frequent use of these powers, both in respect of the subjects of its investigations and also witnesses.

Any individual served with an evidence-gathering or compelled interview request (both of which it can make under the Financial Services and Markets Act 2000) is advised to seek specialist legal advice immediately.

Failing to comply with any such request can result in proceedings for contempt of court for which a prison sentence or fine can be imposed. Engaging with the demands can also pose legal risks: most notably of self-incrimination.

The subject of a compelled interview does not have the right to silence. However, they are permitted to have a lawyer present who can ensure the FCA does not stray beyond its legal powers.

What punishments can the FCA impose?

The subject of FCA enforcement activity faces a variety of penalties if found culpable.

Penalties under the regulatory regime can 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.

Penalties under the criminal regime include a criminal conviction which may result in a fine or imprisonment, or both and confiscation of assets.

I have received a Request for Information from the FCA. What should I do?

A request (or requirement) for Information is the formal means by which the FCA can compel someone to provide documentation and information to its investigators.

The recipient of an Information Requirement may be the subject of an FCA’s investigation, or a witness. Any individual served with such a request is advised to seek specialist legal advice immediately.

How our FCA Investigations solicitors can help

Hickman & Rose has extensive experience and success in FCA investigations. Members of the team have been involved in some of the FCA’s most significant criminal and regulatory cases of recent years, from the successful defence of Panagiotis Koutsogiannis, to the prosecution of NatWest.

However the team does not work only large FCA matters: our work spans cases of all sizes and complexity: from highly contentious and cross-border matters for senior individuals, to ad hoc advice on issues under the FCA handbook.

Hickman & Rose’s FCA work sometimes overlaps with the firm’s other expertise. For instance, we are used to representing individuals regulated by the FCA (approved persons) who are subject to criminal investigation and are concerned about their reporting obligations to the FCA.

Hickman & Rose 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 Prudential Regulation Authority (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.