The Future of FCA Enforcement: Key Changes to the FCA's Streamlined Enforcement Guide

Key Takeaways

• The FCA updated its Enforcement Guide on 3 June 2025, streamlining the previous guide and focusing on targeted enforcement action, as part of its strategic move towards “assertive” supervisory action and away from formal enforcement.
• As announced earlier in the year, the regulated community is generally very pleased that the FCA has dropped its broad-brush ‘name and shame’ proposals. The ENFG does, however, set out a much more modest set of occasions when it will be able to put out an announcement about ongoing investigations, including when it is reacting to information already in the public domain, anonymised statements on issues of regulatory concern and announcements about parties potentially acting without authorisation.
• In the FCA’s original proposals, there would have been a reduction in the amount of consultation the regulator would undertake on proposed changes to the Guide. This has not been implemented, and the FCA has confirmed that it will consult whenever it makes changes. This is a welcome confirmation, giving greater certainty for firms and individuals. Other changes include, amongst others, removing the need for scoping meetings at the outset of an investigation and abolishing private warnings and preliminary investigation reports.

Background

On 3 June 2025, the UK Financial Conduct Authority (FCA)’s updated Enforcement Guide (ENFG or the Guide) came into force. The ENFG,¹  which replaces the previous Enforcement Guide (referred to as ‘EG’) from 2007, describes the FCA’s approach to exercising its main enforcement powers. The ENFG streamlines the EG, which had incrementally grown into a regulatory behemoth at over 300 pages and now reflects the FCA’s renewed focus on targeted enforcement action: see our related Akin alert here.

The ENFG, accompanied by its Policy Statement,²  follows a two-stage consultation process which began in February 2024.³  The original proposals received significant backlash from industry stakeholders, principally regarding the FCA’s ‘name and shame’ proposals. The Policy Statement confirms that the FCA has dropped these proposals,⁴  as well as outlining other important aspects of the FCA’s current approach to enforcement.

FCA’s Approach to Announcing Investigations

The ENFG sets out that the FCA will maintain its “exceptional circumstances” test for announcing an investigation. This had previously been confirmed but is welcome reassurance for the regulated community.

The FCA has introduced three additional circumstances in which an announcement may be made, albeit that these are unlikely to be highly controversial:

1. Unauthorised Activities Announcements: Where the FCA is investigating firms or individuals suspected of engaged in financial services activities without authorisation, the FCA may make an announcement in order to, (i) warn or alert consumers or investors, or (ii) help with the investigation itself (e.g. bringing forward witnesses).

2. Reactive Announcements: Where an investigation has already been made public by the subject of the investigation, an affiliated company (e.g. a parent company) or by the government/other public bodies, the FCA may publicly confirm such investigation.

3. Anonymised Announcements: The FCA may announce that it is investigating a particular matter without naming or otherwise identifying the subject of the investigation, where it is desirable for educating persons generally as to the types of conduct the FCA is investigating or to encourage compliance with the FCA’s rules or other requirements.

Some concern has been expressed in relation to the third of these proposals and the need for the FCA to keep any such announcement truly anonymous. More broadly, the Policy Statement indicates that the FCA has received support for this limited expansion of the “exceptional circumstances” test and it is welcoming to see that the FCA is taking feedback onboard. In its response to Parliament’s Financial Services Regulation Committee, the FCA acknowledged that it should have done more pre-announcement engagement before proposing its ‘name and shame’ policy in order to “flush out … areas of possible confusion and concern at an earlier stage”.⁵The FCA has also committed to a “lessons learned exercise” following its failed proposals, which will cover how the Guide was brought in and experience of how it is working in practice after one year.⁶

Restricting Certain Legal Advisers at Compelled Interviews

Under the ENFG, the FCA has clarified its approach to the attendance of certain legal advisers in compelled interviews. The FCA reserves the right to refuse the attendance of a particular legal adviser at a compelled interview. The FCA may do so where such attendance would be potentially prejudicial to the investigation (or any other ongoing investigation). For example, where the legal adviser has a conflict of interest or owes a duty of disclosure to another person (e.g. the interviewee’s employer).

Whilst this policy grants the FCA wide discretion to refuse the attendance of particular legal advisers, we do not expect to see a significant departure from the FCA’s existing practice (which broadly aligns with the rule).

Consulting on Future Changes to the Enforcement Guide

Originally, the FCA had proposed only consulting on changes to ENFG when required by statute or when the FCA believed it “necessary” to do so. The FCA has reversed course, however, and confirmed that it will consult on all changes to the Guide, applying the typical consultation processes it uses for rule changes.⁷ This is very welcome to the regulated community and the importance of this is demonstrated in the powerful response to the FCA’s name-and-shame proposals which caused the FCA to reverse course.

However, it should be noted that the FCA has moved some aspects of the ENFG – such as guidance on its case selection – to its enforcement website. It appears that any changes to that policy will not necessarily be consulted on by the FCA. Regulated firms and their advisors will need to be vigilant to ensure that important changes are not made without the industry’s comment.

Other Updates to the Enforcement Guide

• Limited Waivers on Firm-Commissioned Reports: The FCA has formalised its approach to accepting firm-commissioned reports (commissioned for the purposes of disciplinary purposes, good management, operational and risk control, for example). The FCA will accept such reports on a limited waiver basis, potentially preventing its use of the document in court, but will not agree the fact or extent to which the report is legally privileged. The FCA will also not accept any condition or stipulation which would purport to restrict its ability to use the information in the exercise of its functions. As such, the results of this change are likely to be limited.
• Role of FCA Directors: FCA Directors are now able to start civil and criminal proceedings, a power previously reserved for Executive Directors. The ultimate decision-maker will depend on the nature of the case (and we expect Executive Directors to be the decision-makers for more significant cases) and criminal prosecutions will still usually be made by Executive Directors.
• Scoping Meetings: The FCA will no longer require scoping meetings, usually held at the start of an investigation to give those under investigation an indication of what, why and how the investigation came about and will unfold. Rather, the need for a scoping meeting will be determined on a case-by-case basis. Scoping meetings can be very useful in investigations, and it is expected that in many investigations, such meetings will still take place.
• Private Warnings: The FCA will no longer use private warnings, which would make a firm or individual aware that issues were sufficiently serious for the FCA to consider disciplinary sanctions, as an enforcement tool. This confirms existing practice and the FCA will consider how best to correspond with individuals and firms regarding issues moving forward. Given the role of ‘assertive’ supervision, which may still be kept private, we would expect that this is not a very significant change in practice, though does evidence the FCA’s move towards ‘impactful deterrence’ where it considers it appropriate.
• Preliminary Investigation Reports and Preliminary Finding Letters: Reports on investigations will no longer be done by preliminary investigation reports or preliminary finding letters. This again confirms existing practice.

Update on the FCA’s Enforcement Action

The Policy Statement confirms that the FCA’s shift towards greater reliance on supervisory action and more targeted enforcement action is well under way. The number of open operations has fallen by over 35% since 1 April 2023 (down from 220 to 128).⁸  The FCA is clearly focusing its enforcement efforts on a smaller number of cases, as well as prioritising speed: five investigations have closed with a public outcome in less than sixteen (16) months, compared to an average of forty-two (42) months in 2023/2024.⁹

What emerges from the FCA’s enforcement statistics is that while assertive supervisory action will be the first tactic, the FCA will still deploy its enforcement powers when needed. When the FCA does so, firms should prepare for the fact that the decision to proceed with an investigation will be well considered, strategically selected and perhaps more likely to end in some form of enforcement action more quickly than before the FCA’s change in approach.

The contribution of Aaron Brooks is gratefully received.

^{1 https://www.fca.org.uk/publication/policy/ps25-5.pdf.}

^{2 https://www.fca.org.uk/publication/policy/ps25-5.pdf.}

^{3 See https://www.fca.org.uk/publication/consultation/cp24-2.pdf and https://www.fca.org.uk/publication/consultation/cp24-2-part-2.pdf}

^{4 As announced by Nikhil Rathi, Chief Executive of the FCA, in March 2025. See our related Akin alert here.}

^{5 https://committees.parliament.uk/publications/48404/documents/253424/default/}

^{6 https://committees.parliament.uk/publications/48404/documents/253424/default/}

^{7 Note that the FCA will not necessarily need to perform a cost benefit analysis when considering changes to the ENFG, as the ENFG is “general guidance” under section 139B of the Financial Services and Markets Act 2000 (FSMA) rather than “rules” under section 138I of FSMA. In its response to the Financial Services Regulation Committee report (here), the FCA acknowledged that cost benefit analyses for rules on guidance may be desirable, but that it would not be proportionate to mandate cost benefit analyses when it may restrict the FCA’s ability to deliver at speed.}

^{8 https://committees.parliament.uk/publications/48404/documents/253424/default/}

^{9 https://committees.parliament.uk/publications/48404/documents/253424/default/}