Despite the proposals including the hurdle of a burdensome public interest test to restrict disclosures to only the most necessary, this has been viewed as a drastic overreach. But what does this mean for companies now?
The regulator is trying to think differently. It recognises that its elongated enforcement process is not fit for purpose.
Long investigations may prevent the FCA proactively tackling widespread customer harm and/or swiftly rectifying market behaviours. Misconduct may well be apparent from the start, but getting to publish an enforcement notice can take years.
Nevertheless, it is imperative that the regulator pivots away from this proposal and utilises the other, more effective tools to deal with these risks. For example, using voluntary requirement/own initiative requirement powers to halt mis-selling, or publishing anonymised information about ongoing enforcement themes.
As noted earlier, the FCA’s recent interventions are good examples of proactive steps to mitigate the risks similar to those mentioned here. Innovative approaches may well be required, but the principles of natural justice must remain paramount.
Being subject to enforcement is a highly stressful experience. Clarity of thought and strategy is required to assess the damage and deal with the regulator’s investigation. Understanding more about how the FCA approaches enforcement will assist with producing a clearer response.
Aside from dealing with the regulator’s questions, companies can get ahead by investigating the harm immediately, identifying ways to mitigate that harm and considering the establishment of redress schemes where necessary.
Managing the FCA investigation alongside proactive work to mitigate any harm will reflect well on a company and will align the business with the key themes arising from the regulator’s approach to enforcement.
Tom Murrell is an associate at Browne Jacobson
