The FCA has updated the criteria for deciding whether to refer a firm or individual to its enforcement division for a formal investigation.  The publication of these criteria follows the review by HM Treasury of the enforcement decision making process in both FCA and PRA in December 2014.

The referral criteria are not intended to be exhaustive and the FCA will take all the circumstances of a particular case into account. The overarching question the FCA will ask itself is whether, overall, an enforcement investigation is likely to further its aims and statutory objectives.  In answering this question, the FCA will take account of the following factors:

  • The strength of the evidence and the proportionality and impact of opening an investigation.
  • What purpose or goal would be served if the FCA were to end up taking enforcement action in the case.
  • Relevant factors to assess whether the purposes of enforcement action are likely to be met.

The FCA clarified that by opening an investigation, it does not mean it has decided that a breach has been committed, or that the FCA has decided what type of enforcement action to take, if any, should it turn out that there has been a breach. The publication is intended to make the FCA's decision making process more transparent for firms and the public.