FCA publicity of enforcement action: Five things we now know

A recent Upper Tribunal decision has lifted the lid on non-public communications that the FCA may have with the press to portray enforcement matters on its own terms – terms which may differ to those that have been agreed with the subjects of investigations.

In this case, the FCA sent an email (which had not been seen or agreed by the subjects of two Decision Notices) to certain media outlets to publicise two Decision Notices that had been published on the FCA’s website. The wording of this email erroneously described Decision Notices as ‘final’ and mischaracterised the findings set out in the Decision Notices. The inaccurate information set out in the FCA’s email was repeated in various stories published by the media outlets that received it. This matter was drawn to the attention of the Upper Tribunal, which was highly critical of the FCA’s approach to publicising the Decision Notices (for more information, click here).

As many readers will be aware, the press wields a considerable amount of power when it comes to publicising enforcement action and trying to influence the way they do so presents a significant reputational risk for firms. Set out below are five things that, following the Upper Tribunal’s decision in this case, firms and individuals should take into account when preparing to handle publicity around FCA enforcement action.

#1: The FCA engages in informal, non-public publicity regarding enforcement action

It is well-known that the FCA engages with the press in relation to a wide range of matters, something which has come under fire in recent months with the publication of the Davis Review. However, many readers may not realise the extent to which the FCA proactively engages with the press in relation to enforcement cases – for example, in this case, unbeknown to the subjects, the FCA sent targeted emails to particular media outlets that it thought would be most likely to run press stories on the Decision Notices.

#2: The FCA’s non-public publicity materials may not be shared or agreed with subjects

In settled enforcement cases, subjects and their advisers are often just privy to the agreed statutory notice, as well as the FCA’s proposed press release. Other types of informal or non-public publicity materials are rarely mentioned, let alone shared by the FCA.

#3: These publicity materials may not correspond with what the FCA says publicly about an enforcement action

The facts of this case represent quite an extreme example of where the FCA actually mischaracterised the findings it had made about a firm and an individual in a non-public press email. However, even if the FCA avoids mischaracterising findings in non-public publicity materials, it could still put its own ‘spin’ on an enforcement case or highlight key findings or comments that have otherwise been buried or negotiated out of agreed statutory notices and public press releases.

#4: The FCA has been recommended to implement a new policy regarding the review and approval of non-public publicity materials

The Upper Tribunal recommended that the FCA should strengthen its procedures relating to publicity regarding Decision Notices in a number of ways. Once implemented by the FCA, these recommendations will provide subjects of investigations with some degree of comfort that the FCA has appropriate systems, controls and safeguards in place to help prevent the dissemination of incomplete or inaccurate information to the press about enforcement cases. However, there is still likely to be leeway for the FCA to portray enforcement cases on its own terms to the press.

#5: What can subjects do to mitigate the risk of ‘off-message’ non-public FCA publicity?

Unfortunately, the answer is not a lot. Subjects can ask that the FCA provides them with copies of any and all supplementary materials that it proposes to provide to the press in connection with settled enforcement cases. Whether the FCA will accede to such requests in practice remains to be seen, although it is likely to be resistant. Firms and individuals may be better off focusing on their corporate communication strategies and ensuring that they cover all eventualities, including the risk of the FCA portraying an enforcement case in terms that are different to those that have been agreed.