Financial Conduct Authority (FCA) Investigations
If you or your business are facing an investigation by the Financial Conduct Authority (FCA), our specialist team at JMW can provide expert advice, assistance and representation to help you achieve the best possible outcome.
Our team is highly experienced in guiding individuals and companies through the enforcement process. We can provide expert advice and support during the investigation process, and representation in cases before the Magistrates Court, Crown Court, Tribunals and High Court. We have a track record of success in defending individuals during investigations and legal proceedings.
How JMW Can Help
At JMW, our specialist team of solicitors are ready to provide you with tactical advice and practical steps to help you challenge any investigation. Working with bespoke teams from different departments, we can tailor a solution for individuals and firms facing various actions brought by the FCA, including:
- Criminal investigations and legal proceedings
- Civil action
Our FCA investigation solicitors have the experience and knowledge to help successfully defend you and your business, giving you the very best chance of securing a favourable outcome that allows you to get on with what matters most - running your business.
Examples of FCA Misconduct
Offences cover a range of misconduct, including:
- Falsely claiming to be FCA-authorised
- Carrying on a regulated activity without authorisation
- Making misleading statements to induce investments
- Failing to cooperate with FCA investigations
Penalties Given By The FCA
Penalties for an FCA offence range from a fine to seven years’ imprisonment. The Financial Services and Markets Act 2000 (FSMA) allows the FCA to take action including:
- Withdrawing authorisation from an individual or business;
- Disciplining authorised firms and people approved by the FCA to work in those firms;
- Imposing penalties for market abuse;
- Applying to the court for injunction and restitution orders; and
- Prosecuting various offences.
Other authorities also have the power to prosecute these offences, including the Crown Prosecution Service, the Department for Business, Innovation and Skills, and the Serious Fraud Office. We regularly advise clients in cases brought by these authorities and we work with other experts to ensure that clients receive the best possible representation in what can be complex investigations and proceedings.
FAQs About FCA Investigations
What is the FCA?
The FCA regulates the financial services industry in the UK, including most financial services markets, exchanges and firms. It has powers to make rules and to investigate and enforce the regulations when the required standards are not met. These powers enable it to take action against regulated and non-regulated firms and individuals.
The FCA came into being in April 2013, along with the Prudential Regulatory Authority (PRA), to replace the Financial Services Authority (FSA), which was responsible for the regulation of the UK's financial services industry. It was abolished following perceived regulatory failure of the banks during the financial crisis. The FCA aims to ensure markets work well and that consumers get a fair deal, while the PRA aims to promote the safety of financial firms.
A single handbook of rules and guidance for all authorised firms carrying out business in the UK is produced by the FCA. The Financial Services and Markets Act 2000 (FSMA) sets out the four statutory objectives for the authority:
- Market confidence
- Financial stability
- Consumer protection
- The reduction of financial crime
These objectives are supported by a set of principles of good regulation, which the FCA must follow when discharging its functions.
What powers does the FCA have?
The FSMA provides powers to take action under the insider dealing provisions of the Criminal Justice Act 1993 and the Money Laundering Regulations 2007. The same statute provides the regulator with the power to interview people and requires them to hand over documents. It also sets out the circumstances in which the FCA is allowed to use those powers.
The FCA investigates people who carry out regulated activities - such as accepting deposits or giving investment advice - without authorisation. This is described by the FSMA as a breach of the general prohibition. Those breaking the law risk imprisonment and other sanctions.
The FCA may also work alongside law enforcement agencies and other regulators on an investigation. These other bodies will have their own statutory powers and rules to govern their conduct. As such, it is important to work with a solicitor who is experienced in working with a wide range of investigations and investigating authorities. The team at JMW can help you to understand the full breadth of any FCA investigations you are subjected to, ensure that investigators comply with the law in carrying out their duties, and advise you of the outcomes you can expect at the conclusion of this process.
Do I need a solicitor during an FCA investigation?
You may feel that, because you have done nothing wrong, you do not need the services of a solicitor during the process of a civil or criminal investigation into your business' conduct. However, it is always important to seek legal advice, whatever your relationship to the FCA's investigation. This can help to make sure you avoid incriminating yourself and are able to build a robust defence, to secure the best possible outcome from the investigation.
There are several roles you may have during the evidence-gathering process, but the most common is as a witness. You may be asked to attend an interview and give testimony, whether on a voluntary or compulsory basis. It is vital to receive legal advice before speaking to investigating authorities, and JMW's expert business crime solicitors can help you to prepare beforehand. We will help to make sure you understand the information that you may be compelled to give, and what information is considered privileged, meaning that you are not under a legal obligation to share it.
Whatever enforcement action the FCA (or another authority) decides to take, having an experienced legal team on your side to build your legal response, represent you in court where necessary, and help to ensure you are treated fairly throughout the process can make a big difference to your experience. Our solicitors will always be honest with you about the outcomes you can reasonably expect, and any defence strategies you can employ to mitigate penalties. With us, you will always know what to expect and be prepared for the most likely conclusions to your case.
Some authorities will bring criminal prosecutions at the end of this type of investigation, and if you are not careful in how you answer questions, you may inadvertently incriminate yourself. In fact, under a new law that is set to come into force, failing to act may also result in a criminal charge in some situations. The new offence is called "failure to prevent fraud" and could have significant ramifications for UK businesses.
What is "failure to prevent fraud"?
The government is expected to introduce a new offence called "failure to prevent fraud", which makes it the responsibility of company directors to implement preventative measures that can reduce the risk of fraud. If an employee is found to have participated in fraudulent activity to the benefit of the company and the directors, senior managers or other figures of authority failed to take action to prevent this, they may also be charged with an offence.
It is incumbent upon businesses to prevent fraud and thereby avoid this outcome. There are several ways to do this, but the primary considerations should be in how companies manage their financial processes. A lack of oversight in areas like payroll or accounts, coupled with a division of responsibilities that puts a single person in charge of multiple areas, can result in a situation in which it is difficult to prevent fraud. Therefore, it is vital that organisations put measures in place to improve oversight over these accounting and payroll processes so as to minimise the risk of financial crime. Wherever possible, create organisational structures that divide responsibilities and create accountability for managing financial procedures.
In this way, businesses can demonstrate to the FCA that they have taken appropriate steps to prevent fraud. If you have questions about this offence or are concerned about an investigation in which your business is involved, get in touch with JMW’s team and learn how we can help.