Skip to content

HM Treasury launches review of FCA and PRA enforcement processes

On 6 May 2014, the Chancellor of the Exchequer announced that HM Treasury would undertake a review of the enforcement decision-making processes for the Financial Conduct Authority (the FCA) and the Prudential Regulation Authority (the PRA) (the Review).

Allen & Overy intends to submit a response to HM Treasury's call for evidence in relation to the Review, responses to which are due by 5.00pm on 4 July 2014. Allen & Overy invites clients who would like to be involved, or would like to share their views with us, to get in touch with the key contacts listed at the end of this article.


When the Review was announced, HM Treasury indicated that it represents a continuation of the government's focus on strengthening accountability of firms and individuals in the financial services industry.

The Review's terms of reference are broad. It will consider the design and governance of the institutional arrangements and enforcement processes at the FCA and the PRA from end-to-end, against the principles of credible deterrence, fairness, transparency, speed and efficiency. The respective roles of the FCA and the PRA, as well as the relationship between their enforcement processes and the Upper Tribunal (Tax and Chancery Chamber) will also be considered.

Scope of the review

The Review will consider the following key areas:

  • the effectiveness of the current FCA and PRA enforcement processes and whether they engender "credible deterrence" amongst firms and individuals;
  • the fairness and transparency of the criteria used when the FCA and the PRA determine to refer a matter to Enforcement;
  • the effectiveness of coordination of investigations and enforcement action between the FCA and the PRA;
  • whether sufficient information is provided to subjects of the FCA and PRA enforcement investigations, and also whether adequate time is allowed for subjects to make representations during the enforcement process;
  • the fairness of the settlement processes followed by the FCA and the PRA, including whether it is appropriate to offer settlement discounts on financial penalties in all or any cases; and
  • the role of the FCA's Regulatory Decisions Committee and the perception that there is a "lack of independence" in disciplinary decision-making by the FCA.

The Review will also undertake a comparative analysis of arrangements and processes for enforcement decision-making in other jurisdictions. In particular, the Review will consider whether the UK could learn any lessons from international practice and whether there are any specific features of other jurisdictions' enforcement processes that could be introduced in the UK.

Next steps

There is clearly a prospect of further reform following the Review, which could have a significant impact on the conduct of contentious regulatory matters in the future.

HM Treasury intends to report its findings and proposed recommendations to the Chancellor of the Exchequer, The Rt Hon George Osborne MP, in Q3-Q4 2014.

For more detailed information regarding the Review and the areas it proposes to cover, please see:

Legal and Regulatory Risk Note
United Kingdom