Name, Shame, and Regulate: FCA Sharpens Its Transparency Toolkit

Recent decisions from within the FCA indicate a drive to name more firms under investigation under the “exceptional circumstances” rule, namely the public interest test, to alert potential victims and encourage whistleblowers. 

In R (CIT) v Financial Conduct Authority (No 1) [2025] EWHC 2614 (Admin), the High Court recently upheld the FCA’s decision under judicial review, to issue an announcement revealing the identity of a firm facing investigation. The firm challenged the FCA, arguing the decision maker had fundamentally misinterpreted the Enforcement Guide and the decision was both unreasonable and disproportionate to the outcome. 

The FCA revised its previous and more controversial “name and shame” proposals following industry concerns about implications of these announcements. 

Legal Position

The relevant provisions of the FCA’s Enforcement Guide is Section 4.1 (which deals with publicity). The starting point is that FCA investigations are not normally made public (ENFG 4.1.1G). 

However, in exceptional circumstances the FCA may depart from this and issue a “named announcement”, which involves consideration of: 

• Whether an announcement is desirable to achieve certain objectives, including (i) maintaining public confidence in the UK financial system; (ii) the protection of customers or investors; (iii) the prevention is widespread malpractice; and (iv) maintaining the smooth operation of the market; and
• The potential prejudice that may be caused to the subject of the investigation

(ENFG 4.1.4G). 

Conversely, the FCA may alternatively make an anonymous announcement where it is desirable for the purpose of educating persons generally as to the types of conduct the FCA is investigating or to encourage compliance with the FCA’s rules (ENFG 4.1.8G).

In application of the recent judicial review matter, the FCA decision maker when deciding to publicise the firm’s name was ultimately convinced by a second memo by four members of the case team. The reasoning was to send a message to the firm’s customers that “they may wish to consider their options by reference to aspects of the way in which they may have come to be the [firm’s] customers”.

The High Court considered the publication reasonable on this ground to reach further potential victims but noted that consideration had been made by the FCA’s decision maker of any alternative options to alert customers of all companies across the sector. The naming announcement was purely the most effective regulatory response. 

Due to the power under ENFG 4.1.8G, the FCA is still required to consider specifically the choice it faces between making a named announcement and an anonymised announcement to justify the exceptionality and desirability of a named one. 

The Upsides and the Downsides

The transparency of FCA’s power to name firms under investigation has been a welcomed change for some professionals and members of the public alike:

1. Anything that protects and enhances the regulatory environment for companies that carry out regulated business should obviously be supported. More protection for consumers is rarely a bad outcome.   
2. There is an obvious public interest for firms to be identified, that do not adhere to the financial regulations to protect client money, at the earliest opportunity.
3. Publicly naming companies will make it easier for consumers to be made aware that further checks should be completed before they transfer money/contract with named companies or, if already having done so, to take steps to protect themselves and/or recover money already transferred. Early identification of any wrongdoing is nearly always the key to successful recovery of monies invested/spent.
4. For professionals, especially MLRO’s or executives in a regulated firm, the knowledge that the FCA could publicise any errors/wrongdoing should ensure better overall governance and better business practices.  

However, the High Court’ s recent decision to reveal the identities of firms under investigation brings understandable concerns:

1. Some practitioners view a named announcement as inflammatory and highly unpredictable as to the effect it will have on the firm’s reputation and the industry as a whole.
2. It seems counter intuitive and against natural law to publicise investigations before they are concluded.
3. The FCA runs a risk of the named firm being deemed guilty in the public eye when no such finding has been made.  This will lead to instances where the FCA will get it wrong and incorrectly name innocent firms.
4. It will create a two-tier system of reporting, the non-reporting of well-established firms versus reporting newer firms still in their early growth cycle. The FCA are likely to think twice before naming a well established firm, the potential damages claim if the FCA gets it wrong will be immeasurable. In comparison, the potential damages claim against a new start-up is much smaller and the FCA will be more likely to name a start-up firm.
5. Even if the FCA did report an established firm, an established firm should be able to trade out of an announcement, the damage to a start-up would be cataclysmic and most likely lead to the start-up ceasing to trade, with job losses and loss of investor monies.     
6. The exceptional circumstances test was adapted from the previous “name and shame” policy that there need only be a general public interest to justify a named announcement. This decision brings concern of a shift backwards and in the wrong direction, and that the FCA is not doing enough.
7. There is also the concern that the policy does not go far enough, and individuals/controlling minds should also be named and shamed. 

What to do if you are wrongly named

It is important to act promptly upon receipt of a Warning Notice and to ensure key documents are not deleted/destroyed/altered.

In R (CIT) v Financial Conduct Authority (No 1) [2025] EWHC 2614 (Admin) the decision to name the firm publicly was upheld by the High Court, there will be instances when the FCA’s decision to do so is incorrect. It is worth noting that before the FCA issue a public notice, the FCA will generally issue a Warning Notice under 2.37 of the FCA Enforcement Guide setting out the rationale for deciding to make a public announcement. Under s.391 of the FSMA 2000 and 6.7 of the FCA Enforcement Guide, the FCA are prevented from publishing Warning Notices until after consulting the persons to whom the notice is given or copied. The person who receives a Warning Notice has a right to make representations on the FCA’s proposed decision.

Upon receipt of that Warning Notice, legal advice should be obtained on what options are available to contest the Warning Notice. 

The first step will be to exercise your rights under FSMA section 394 to obtain copies of all the material the FCA holds. In our experience, a section 394 application will invariably lead to a dispute over excluded material and/or the FCA’s application of the public interest test. 

Once the material has been disclosed, it needs to be reviewed by someone familiar with the case to identify any evidence that undermines the FCA’s case for making a public announcement. 

If sufficient evidence exists to undermine the FCA’s case, written representations will need to be prepared to the Regulatory Decisions Committee (RDC). If you have received a final Decision Notice and your representations to the RDC fail, you can refer to the Upper Tribunal (Tax and Chancery) Chamber for a full rehearing. If you believe there has been a misapplication of procedure, a judicial review in the High Court can be made and/or it may be necessary to consider injunctive relief. 

Closing thoughts 

Overall, whilst breaking anonymity carries reputational risk to firms, the High Court’s support of the FCA’s decisions to make a named announcement was based on a careful analysis of what the Enforcement Guide already allowed for. The circumstances still need to be exceptional and the benefit to consumers and investors alike must be considered. 

If a public announcement is unavoidable, firms will still be given sufficient notice of any announcement and should be proactive in devising a media strategy to mitigate any damage with internal stakeholders/investors and public perception, and ensure the firm can continue to trade out of the position. 

If you require further assistance on this topic or general around regulatory issues, please contact David Pack or Faye Summers.