In this article, we explore the extensive range of investigative and enforcement powers of the U.K.'s principal financial services regulator, the Financial Conduct Authority (FCA), practical tips for handling requests for information and investigations, recent changes to the FCA's approach to investigations and enforcement, and how the FCA is increasingly turning to its supervisory toolkit to achieve its desired outcomes.
FCA powers of investigation
Statutory powers
Part XI of the Financial Services and Markets Act 2000 (FSMA) sets out the FCA's powers to require the production of information and documents, to require reports to be prepared, to conduct investigations, and enter premises with a warrant. They are in addition to powers that the FCA has to request information from unauthorized persons in certain circumstances. Failure to comply with a requirement in Part XI can lead to criminal sanctions.
Overseas regulators
The FCA can also use its information gathering and investigation powers in support of overseas regulators and it works closely with a range of international law enforcement agencies and regulators to tackle crime and misconduct and take enforcement action. It recently highlighted its use of the Crime (Overseas Production Orders) Act 2019, which enables the FCA to get court orders in the U.K., which can then be served directly on providers in the U.S.
“On notice” or “without notice”
The FCA has both “on notice” and “without notice” powers.
Where the FCA determines that a firm or individual may be cooperative, it uses commensurate powers and provides notice of its requirement for information and the subject is afforded a reasonable timeframe to provide the information.
However, where the FCA has reasonable grounds to believe its “on notice powers” would not be complied with and evidence would be tampered with or destroyed, it will seek to use its powers on a “without notice” basis (also referred to as a “dawn raid”). While the FCA does not deploy these powers very often, as this is a power exercisable by other regulators (notably the SFO), all FCA authorized firms should be prepared for such a possibility by maintaining a thorough and up-to-date dawn raid policy and undertaking staff training.
Criteria for opening an investigation
Under s168 of FSMA, the FCA may open a specific investigation if there are circumstances that suggest a firm or an individual may have breached one or more FCA rules or principles, or may be guilty of certain offences (including the general prohibition, market abuse, insider dealing and money laundering offences).
The FCA also has general power under s167 of FSMA to open a general investigation into its business, ownership or control of that firm where there is "good reason" to do so.
The FCA has published non-exhaustive factors that it considers when deciding to open an investigation and how it assesses serious misconduct. Underpinning its decision, is the following question: "Overall is enforcement action likely to drive impactful deterrence?" This involves considering its regulatory priorities (typically set out in regular strategy papers), how serious the misconduct is, the harm or potential harm caused, other regulatory responses available (see below the role that supervision plays), and other FCA investigations in progress, as well as how best to use its resources effectively and efficiently.
The FCA also considers the reaction of the specific firm or individual to the potential breach including any steps taken to remedy the harm.
Practical tips
Scope of investigation
Subject to limited exceptions, under s170 of FSMA the FCA is required to give a written notice of the appointment of an investigator, citing the relevant statutory provisions under which the investigator has been appointed and the reason for their appointment. At the start of an investigation, there may be an opportunity for the firm to request a scoping discussion with the FCA.
Internal investigation
Firms should consider whether it is helpful to undertake an internal investigation or seek a report from a professional advisor. The FCA has set out its approach to firms conducting their own investigations in Chapter 3.6 of its Enforcement Guide.
Preparing for interviews
There are four main types of interview, depending on the nature of the investigation and the status of the individual being interviewed: compelled under ss171, 172 and 173 of FSMA (this is the most common form of interview), voluntary and not under caution, voluntary and under caution, under caution and under arrest. Individuals may also be asked to attend an interview as part of an internal investigation.
Attending an interview can be a daunting exercise. While the preparation required will vary depending on the type of interview and the focus of the investigation, there are a number of general steps that individuals should take, which include:
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obtaining further information on the purpose of the interview and why they have been asked to be interviewed
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having appropriate legal representation at the interview (which the FCA generally always permits) and finding out who will pay for legal costs
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working with their advisor to consider the types of questions that the interviewer(s) will ask and strategies for responding
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ensuring they are thoroughly familiar with any documents that have been provided in advance and with any other documents that might be relevant
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checking the transcript of the interview for its accuracy and considering whether any clarification or further explanations are needed.
Documents
While the FCA's powers to request information are far reaching, it does not have the power to request “protected items”, which are broadly speaking those documents covered by legal privilege (see s413 of FSMA).
Firms facing FCA information requests and subject to an FCA investigation should carry out a document review to ascertain which of its documents are protected items. The decision to not disclose a document to the FCA is by no means a straightforward one. Firms and individuals have a duty to be open and cooperative with the FCA. As Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, highlighted in a speech in 2023, the FCA places a high value on "transparency and cooperation", warning firm's legal teams not "to claim privilege for every piece of paper and generally get in our way."
Publicity around an investigation and disclosure
While the FCA can only publicize the existence of an investigation in “exceptional circumstances”, firms should be prepared to deal with any speculation and mitigate the risk of leaks occurring by managing carefully who within their organisation needs to know about an investigation.
A U.K. listed company that is under investigation will need to assess whether the fact that there is an investigation is “inside information”, which would mean it would have to announce the investigation as soon as possible. The fact of an investigation may also need to be disclosed in a prospectus when raising debt or equity capital.
The FCA's approach to investigations and enforcement
Leadership and strategic changes
In 2023, the FCA appointed Steve Smart and Therese Chambers as joint Executive Directors of Enforcement and Market Oversight, following the departure of Mark Steward. This was not just a senior reshuffle; rather it signalled a significant change in the regulator's approach to investigations and enforcement.
Steward's tenure as head of enforcement was characterized by a shift towards a more assertive, proactive and high-volume investigation strategy. Speaking in 2017, Steward noted a 75% increase in the number of FCA investigations, ascribing this in part to the FCA's approach to opening investigations and stressing the "diagnostic" function of an investigation. With an increase in the number of open cases (as at 1 April 2020, the FCA had over 640 open cases), the average length of investigations also increased, reaching approximately 42 months in 2023/24.
Under Smart and Chambers, the FCA has committed to "streamline and prioritize" its operations, which has led to it opening fewer investigations. As its June 2025 policy statement (PS25/5) noted, the number of "open operations" fell by over 35% since 1 April 2023. According to a Freedom of Information request, as at March 31 2025, the FCA had 381 open cases. In the first edition of a new newsletter, Enforcement Watch, published in January 2026, the FCA reported that it had opened 23 "enforcement operations" between June 3 2025 and December 31 2025, six of which related to individuals. The FCA is also speeding up the time an investigation takes. Speaking in April 2025, Chambers reported that five investigations had achieved an outcome in 16 months or less. In April 2026, the FCA noted in a press release concerning Sapia Partners LLP that it had concluded its investigation into the firm in 12 months, citing this as an example of how it is expediting investigations.
Intensive supervision
A key element in the FCA's evolving approach to enforcement, is the use of its wider toolkit, particularly its supervisory tools, to deal with potential or actual harm. The FCA has a number of intervention tools at its disposal (such as the appointment of a skilled person under s166 of FSMA where it has concerns about a firm's activities, the ability to vary or impose requirements on a firm's permission, and requiring a senior individual to give an attestation that it will take or has taken specific action required by the regulator). According to its 2024/5 annual report on enforcement data, the FCA had 260 new "intervention cases".
The impact of these tools should not be underestimated. Skilled person reports, which numbered 83 in 2023/24, are costly and intrusive exercises for firms, often require remedial programmes and in some cases are a prelude to an investigation. The imposition of requirements on a firm's permissions – in 2024/5 the FCA imposed 119 so-called voluntary restrictions or VREQs – can paralyze a business. Attestations, which more than doubled between 2023/24 and 2024/25, increase the risk of enforcement action against senior managers under the FCA's Senior Managers and Certification Regime.
Conclusion
When, back in 2009, Hector Sants, the then head of the FCA's predecessor, the Financial Services Authority (FSA), reflected on the use by the FSA of its enforcement powers he said that "people should be very frightened of the FSA." Fast forward to 2026, and while it is clear that at the heart of the FCA's enforcement priorities is an intent for enforcement to be "loud and in your face", it is equally clear that it has a range of non-enforcement tools at its disposal including powerful supervisory tools, which it is ready to deploy and for which firms should be prepared.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
