The case for enforcement 'transparency'

A year after they were appointed, the FCA's new co-heads of Enforcement are involved in a battle of strength with the 45,000 regulated firms. Encouraged by their lawyers, the firms are now challenging the unit's plan to publicise the names of organisations that it investigates. What are the underlying issues? How is the system likely to work in practice? And which side will hold sway? Neasa MacErlean reports.

How did we arrive here?

Over the past year it has become clear that the Financial Conduct Authority's process of enforcement had to change. Its tardiness was being repeatedly criticised in the Upper Tribunal, with cases regularly taking over five years to resolve. For investigations open on 1 April 2023, the average duration was 64 months (ranging between 39 for dual-track regulatory/civil cases and 79 months for criminal), according to the 2022/23 annual operating service metrics. [1] In the weeks before the publicity proposal was unveiled through a consultation paper, [2] law firms were predicting something big, and they were right. The paper, published on 27 February, talks about wanting "to speed up investigations" through "a streamlined caseload of investigations better aligned to our strategic priorities". And the FCA confirmed to Compliance Monitor that such an approach is expected to enable it "to do fewer investigations at a faster pace". Also, in a letter to the parliamentary Financial Services Regulation Committee in April, [3] in which it discussed the proposal, it said: "We are already seeing the results of our sharper focus, opening fewer cases in 2023/24 than we have done in the preceding years."