Impactful Deterrence and Doing the Right Thing: The FCA’s Enforcement Strategy Unpacked

The FCA’s approach to regulatory enforcement has shifted in recent years, moving away from a broad-brush approach to one that is more selective in order to focus on “impactful deterrence”. In short, this means the FCA is bringing fewer enforcement cases, and focusing on the cases most likely to succeed in as short a time as possible, in an effort to send the right signals in the right areas to the market. 

Grappling with a large number of open cases and lengthy average investigation times, the FCA has sought to streamline its enforcement operations since the appointment of Therese Chambers and Steve Smart as joint Executive Directors of Enforcement and Market Oversight.

This more selective approach leaves questions as to which cases the FCA is most likely to focus on and how it deploys its resources. FCA publications — including its annual enforcement data, speeches by Therese Chambers, and, most recently, its new Enforcement Watch newsletter — all provide clues as to the FCA’s current enforcement focus areas and broader enforcement strategy.

In this article, we highlight some of the key trends and enforcement hot spots. While firms will, of course, seek to avoid the attention of the enforcement team, we set out important considerations for firms to bear in mind should they be faced with the possibility of enforcement, in light of the current enforcement climate and the FCA’s most recent expectations. 

For completeness, we note that the PRA has been quiet on the enforcement front in recent years, reserving action for breaches that go to the regulator’s statutory objectives. Consequently, we do not focus on the PRA’s approach to enforcement in this article. 

Enforcement Volumes

The first edition of Enforcement Watch contains some interesting statistics which provide further visibility into the FCA’s current enforcement caseload. Enforcement Watch reveals that the FCA opened 23 enforcement operations between 3 June and 31 December 2025. This is comparable to the total cases opened over the course of a full year in 2023-24 and 2024-25.

The rise in the number of operations being opened could signal a new confidence at the FCA that it can deal with cases more promptly and efficiently

What Enforcement Watch does not tell us is how many enforcement operations are currently open and how fast these are moving through the system. However, Therese Chambers noted in a speech last autumn that, as of 1 October 2025, there were 124 open investigations, indicating a continued downward trajectory. Further, seven recent investigations achieved an outcome in 16 months or less, and the FCA delivered a steady stream of outcomes throughout 2025, focusing on acceleration of investigations. Consequently, the rise in the number of operations being opened could signal a new confidence at the FCA that it can deal with cases more promptly and efficiently. Nevertheless, its work to clear the backlog of cases is definitely not complete.

Enforcement Priorities

The FCA explains that, of its 23 most recently opened cases, 18 relate to regulatory breaches, four to criminal and regulatory offences, and one to criminal offences only. The FCA has shown a decided focus on bringing criminal proceedings recently, although it has been the norm for the regulator to open dual-track investigations when both criminal and regulatory provisions are engaged. Enforcement Watch gives us some clues as potential new enforcement hot spots; action against senior managers and fair value under the Consumer Duty seem to be the areas of choice.

The FCA indicates that six of the 23 cases relate only to individuals, suggesting that action against senior managers is in the pipeline. While significant enforcement cases were expected when the SMCR was first introduced for banks 10 years ago, the regulators have acknowledged that the regime has acted more successfully as a deterrent than as a source of fines or penalties. The FCA reveals that it is looking into individuals’ potential responsibility for regulatory failings, such as providing false information to the FCA, suspected fraud, and misappropriation of funds. The industry has waited a long time for a really instructive case on senior managers that provides further clarity around the Duty of Responsibility, so any such outcome would generate keen interest.

Another notable area of focus is the Consumer Duty; the FCA is investigating six potential Consumer Duty breaches, particularly in relation to fair value, which is one of the most challenging aspects of the Duty for firms. Again, while the FCA has undertaken a great deal of supervisory work in relation to the Duty since its implementation — and has been working with firms that are not meeting expectations — this work has not yet resulted in an enforcement outcome. 

The regulator has been keen to emphasise that it will not pursue enforcement as long as firms are clearly trying to take the right approach under the Consumer Duty; it does not expect implementation to be perfect across the board, but it does want to see evidence of firms using their best efforts. It will therefore be interesting to see whether one of these cases results in a public outcome, and learn the details of the precise failings.

Enforcement Watch gives us some clues as potential new enforcement hot spots; action against senior managers and fair value under the Consumer Duty seem to be the areas of choice

Unsurprisingly, a number of cases relate to financial crime controls, and other systems and controls failings. These have long been key enforcement focus areas. This bears out in the FCA’s most recent data on skilled persons reports, which indicates that, in the last quarter, the majority of reports were commissioned in relation to controls and risk management frameworks, and financial crime. 

In our experience, transaction reporting, financial crime, and MAR-related procedural failings are the areas of the rulebook where the FCA is most likely to react seriously to rule breaches, even if such breaches do not result in tangible harm to markets or consumers.

The FCA has several open cases relating to market disclosure failings by listed issuers. Some of these are already in the public domain. We know that the FCA polices misleading statements under the Listing Rules vigorously, but not always consistently. The regulator appears to take action where there is a wider concern rather than simply because the share price of a company has moved significantly when the market has been updated following a delay.

Further, five firms in the consumer investment and asset management sectors are being investigated for potentially misleading consumers and third parties with false statements, and failing to recognise conflicts of interest. It is not clear whether the first of these areas might relate to greenwashing; the FCA has yet to take any public action for breach of its anti-greenwashing rule that was introduced in 2024. The FCA announced last year that it was commencing a multi-firm review focusing on conflicts of interest at asset managers, so presumably any action relating to conflicts stems from this review.

Although not mentioned explicitly in Enforcement Watch, the FCA has been pursuing insider dealing cases with vigour and has had significant success in this area recently. What is also notable is the areas in which the FCA is not pursuing much action. For example, there has been relatively little enforcement action over mis-selling, even though this is prioritised at supervisory level and via redress.

Threshold for Opening Investigations

Enforcement Watch provides further insight into the sorts of cases that the FCA is likely to pursue. The FCA states that it is more likely to move to enforcement in situations that involve:

• Repeated failures to be open with the FCA about its concerns 
• Failing to put things right promptly, when FCA supervisory work has highlighted significant concerns
• Deliberately misleading the FCA, consumers, or the markets
• Causing significant harm to consumers through fraud, severe disruption to services, and misappropriation of assets

These have all been features of recent enforcement action. Evidence suggests that the FCA takes such behaviour very seriously and will pursue even the smaller cases. However, the regulator has also made clear that, in some developing areas like the Consumer Duty and use of AI, it will not be too quick to sanction firms that are trying to get things right. Instead, the FCA will focus more on deliberate and calculated breaches, or firms not resolving issues that have emerged.

The FCA has placed a strong emphasis on firms “doing the right thing” — the subject of (at least) two speeches by Therese Chambers. The message is clear that firms cooperating with the regulator, fixing mistakes, and offering redress where appropriate will likely benefit from kinder treatment by the FCA. The expectation is that firms contacted about potential enforcement should be open and take responsibility. While, depending on the circumstances, taking responsibility might not always be the right course of action for firms, they should at least aim to engage cooperatively with the regulator. 

The FCA has highlighted on several occasions that firms paying voluntary redress to consumers could receive reduced financial penalties and even avoid enforcement action altogether, so this is an important aspect to consider when relevant. Firms should also note that Therese Chambers has emphasised that the majority of FCA enforcement operations now end with an enforcement outcome. Therefore, firms should assume that if the FCA has opened an enforcement operation, this is not purely speculative; it will be with a view to achieving a tangible outcome.

Threshold for Announcing Investigations

Although the FCA did not get its way in terms of introducing a new public interest test for deciding when to announce enforcement investigations, the subject is far from being put to bed. The FCA is now considering when it can use its “exceptional circumstances” test to justify an early-stage announcement, bolstered by success in the courts, which affords the regulator relatively wide discretion. 

The recent judicial review of the FCA’s decision to name a firm under investigation indicated that, although there is a high threshold for the FCA to announce, the courts will be reluctant to find that the FCA did not act reasonably in making such a decision. This is likely to embolden the FCA to make more extensive use of its pre-existing powers to put investigations in the public domain. Indeed, it is tempting to see the FCA’s approach as being the one that it wanted to alter its guidance to allow it to pursue, but taken under the unchanged guidance (in line with the response to its proposal that was made by much of the industry).

Firms under investigation should be conscious of the fact that the FCA will consider whether to announce, potentially both at the outset and on an ongoing basis throughout the investigation

What is striking from Enforcement Watch is that the FCA now seems to be considering whether to announce investigations in every case (despite its consultations on the so-called “name and shame” proposals indicating that it was only seeking to be able to announce on a marginally more frequent basis). Even where the FCA has decided that the threshold for announcing has not been met, the regulator states that it is “keeping the position under review”. 

Consequently, firms under investigation should be conscious of the fact that the FCA will consider whether to announce, potentially both at the outset and on an ongoing basis throughout the investigation. It is also worth noting that, in the judicial review case, the FCA provided the firm in question with only 24 hours to challenge its decision to announce. As a result, firms should be prepared for the possibility of the FCA seeking to announce an investigation at very short notice throughout.

Decisions Upheld, Penalties Lowered

While a few years ago the FCA struggled with the Upper Tribunal reaching different conclusions on enforcement cases and criticising how the FCA had conducted itself, recent decisions have sided with the FCA, which might give the regulator more confidence in the cases it brings. However, despite the Tribunal supporting the FCA’s decisions, there has been a pattern of the Tribunal reducing penalties on a number of occasions. This may call into question the way in which the FCA applies its penalty framework, which is often seen as opaque. The Tribunal went so far as to say that the fine imposed by the FCA in one case was “arbitrary”.

It will be interesting to see whether this will prompt the FCA to reveal more reasoning behind the fines it imposes, or influence the scale of the regulator’s penalties. It could also lead to more challenges before the Upper Tribunal by firms and individuals with the hope of reducing penalties, even if the ultimate enforcement outcome is not expected to change, or the breach (but not the level of the fine) is agreed. 

Conclusion

The FCA enforcement landscape remains dynamic, with shifting priorities, although certain areas remain long-standing enforcement hot spots. The regulator’s newest caseload sheds some light on the latest priorities, and could well lead to important outcomes relating to the SMCR and the Consumer Duty. 

Firms facing potential enforcement action should be mindful of how they interact with the FCA, given its focus on bringing successful enforcement cases in shorter timeframes. The regulator has stressed the value it places on proactive engagement, openness, and a willingness to remedy mistakes (including potentially offering redress), and firms should bear this in mind if they become the subject of an enforcement investigation. Firms also need to take account of the FCA’s recent successful run in the Upper Tribunal and its ability to announce enforcement investigations, which could influence the way in which the regulator conducts investigations in future.