FCA seeks further views on enforcement transparency proposals

The FCA has published Consultation Paper 24/2 Part 2 (CP24/2 Part 2) which sets out revisions to its proposals for 'a measured increase in transparency about its enforcement investigations'. In this second phase of the consultation, the FCA has highlighted four changes to its original proposal which are intended to respond to feedback received:

• the potential negative impact on a firm would be explicitly considered as part of a public interest test - previously it was not included as one of the factors;
• to allow for representations to be made, firms would be given ten days’ notice ahead of any announcement being made, rather than the one day originally consulted; if the FCA decided to proceed with disclosure, firms would then have an additional 48 hours’ notice;
• the potential for an announcement to seriously disrupt public confidence in the financial system or the market has been included as a new factor in the public interest test; and
• the FCA will not announce investigations which began before any changes to the policy come into effect, although it may reactively confirm investigations which are already in the public domain, where this is in the public interest.

CP24/2 Part 2 also sets out plans for further engagement with the industry and other stakeholders on the proposals. The FCA also comments that CP24/2 'aims to assist ongoing parliamentary scrutiny, including by the Commons’ Treasury and Lords’ Financial Services Regulation Committees'.

Responses are requested by 17 February 2025. The FCA board will make a decision on the proposals in Q1 2025. 

Herbert Smith Freehills responded to the FCA's first consultation, and also engaged widely with clients and other stakeholders (please see a summary of our response here). We will engage with the regulator during the second consultation exercise, and continue to encourage better, evidence-based policymaking. We will publish our views on the new consultation shortly. In the interim, if you would like to discuss CP24/2, please contact us.