What is the FCA investigation process?

The FCA or Financial Conduct Authority is the body responsible for regulating the financial conduct of nearly 60,000 businesses and financial markets in the UK. This helps to ensure that consumers are getting a fair deal from those markets. If you have been investigated by the FCA or believe you might be investigated, you should seek legal advice as early as possible.

This post will explore what the FCA investigation process entails and what investigation powers the FCA is granted.

Why Might the FCA Investigate You?

The FCA will investigate you if they have reason to believe that you have committed serious misconduct, for example, following a complaint by a client or investor. If you have breached an FCA rule or requirement but not deemed to have committed serious misconduct, the agency may use tools other than investigation and enforcement.

FCA Investigation Process

Knowing the FCA’s investigation process can ensure that you are more informed when being investigated.

An FCA investigation will typically be started by the sending of a Notice of Investigation to the relevant parties. Once the investigation has been undertaken, the FCA will present their findings and the case will be resolved (unless the involved parties challenge the case). Please refer to the investigation handbook for a more in-depth summary of the FCA’s investigation process and some of the key terms used.

Here is a summary of the FCA’s investigation process in more detail.

    1. Appointing investigators
      • The FCA appoints investigators to the case.
      • If appropriate, the company or person who will be under investigation is sent a Notice of Appointment of Investigators.
    2. Scoping discussion
      • The FCA instigates a scoping discussion. This is a chance to sit down with the company or person under investigation and explain the FCA investigation process: why they have appointed investigators to the case, what the scope of the investigation is, what will likely happen during the process and give them a rough timeline.
    3. Investigation commences
      • The FCA investigation process itself begins, which may involve requests for information, necessary documents or interviews with involved parties and potential eyewitnesses.
      • If you are asked to interview as part of the investigation, you can have legal representation with you – this is vastly beneficial.
      • See below for a summary of the FCA’s investigation powers.
    4. Preliminary findings
      • When the FCA’s investigation process is complete, the FCA will send the involved parties a summary of its investigators’ findings and how it is currently viewing the case.
      • The company or person under investigation will be given a time frame to offer a written response to these findings.
    5. Presenting options
      • Resolution – the company or person under investigation can choose to resolve the issues. If they do so within the early resolution stage, they can receive a discount on their fines (see ‘Early Resolution’ below).
      • Contest the case – the investigated party can ask to contest the case before the Regulatory Decisions Committee (RDC).
      • Expedition – they can also request to use the FCA’s expedited procedure for reference to the Tribunal.
    6. RDC submission
      • If the FCA decides to take action and a resolution cannot be reached, the case will be submitted to the RDC.
    7. Warning Notice
      • Where appropriate, the RDC will decide to submit a Warning Notice to the investigated party to inform them that the RDC intends to take further action.
      • The investigated party then has access to all materials used by the RDC in that decision. They are given 14 days to make written representations to the RDC or request to make oral representations.
    8. Representations to the RDC
      • The RDC will reconsider its decision in light of any representations made and any new information.
      • This is the point where oral representations can be made.
    9. Decision Notice
      • The RDC will make its decision and, where appropriate, send out a Decision Notice to the investigated party.
      • At this point, the investigated party can refer the case to the Upper Tribunal, which will look at the case anew.
    10. Final Notice
      • If no referral is made to the Tribunal, the RDC will serve a Final Notice.
    11. Published information
      • The final step of the FCA’s investigation process is to publish any required information or that which they consider appropriate.

    Early Resolution

    In some cases, the matter can be resolved more quickly without undergoing the entire FCA investigation process. When the FCA has appraised a case, it gives a certain deadline – until that time, if the matter is settled, then the fine is discounted by a percentage.

    The criteria for this discount relies on three main factors – facts, liability and penalty. As seen in the below table from the FCA’s Enforcement Information Guide, there is a different amount of penalty discount depending on how much of the facts, liability and penalties they can agree on.

    Remember, when looking to reach an early resolution, having legal representation can help you make a more informed decision regarding your options.

    A table from the FCA investigation process handbook detailing penalty discount criteria.

    FCA Investigation Powers

    There are various courses of action open to the FCA if they feel the need to act in the name of protecting consumer interests. It is important to note that FCA investigators do not have powers of arrest. Taken from the FCA’s website, the FCA’s investigation powers include the ability to:

    • Withdraw a firm’s authorisation
    • Prohibit an individual from operating in financial services
    • Prevent an individual from undertaking specific regulated activities
    • Suspend a firm for up to 12 months from undertaking specific regulated activities
    • Suspend an individual for up to two years from undertaking specific controlled functions
    • Censure firms and individuals through public statements
    • Impose financial penalties
    • Seek injunctions
    • Apply to court to freeze assets
    • Seek restitution orders
    • Prosecute firms and individuals who undertake regulated activities without authorisation

    If you think you may be investigated by the FCA, or you have received notice of appointment of investigators, you should seek legal advice as early as possible for the best chance of success. At St Pauls Chambers, our FCA barristers can advise you throughout the FCA investigation process and through to criminal prosecution and/or civil proceedings.

    Contact us today to discuss your options and see how St Pauls Chambers can help you.

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