This blog post was first published by Law360 on January 2, 2026.
From accelerating investigations to reinforcing cultural standards and transparency, the Financial Conduct Authority signaled a clear intent in 2025 that is likely to continue in 2026: fewer investigations, faster resolutions and a continuing focus on combating financial crime.
We set out the key messages from the FCA in 2025, together with some predictions and tips for staying on the right side of the regulator in 2026.
Fewer, Faster Investigations
A revised approach to enforcement has been on the cards since Therese Chambers and Steve Smart took the helm of the FCA's enforcement division in 2023. Publication of the updated FCA Enforcement Guide in June formally confirmed it.1
The policy statement accompanying the updated enforcement guide stated that the FCA had raised the bar for opening an investigation and strengthened its preinvestigation assessment processes.2
Speaking at the City & Financial Global FCA Investigations and Enforcement Summit in October, FCA's Joint Executive Director of Enforcement and Market Oversight Therese Chambers reinforced the message, declaring that the FCA is conducting fewer investigations, faster. She was referring to a key strategic ambition for the FCA throughout 2025 to reduce its open caseload and resolve open investigations in a shorter time frame.
Evidence of the revised enforcement strategy is already being borne out in practice. In a letter to the Treasury Select Committee in March, the FCA confirmed that the number of open enforcement operations had fallen by 35% since April 1, 2023, and that no investigations into regulated firms opened since that date had been closed with no further action.3
It is unsurprising that the FCA remains eager to close investigations faster than it has in the past; it previously took an average of 42 months for a public outcome to be reached and in some cases, much longer. As of March 31, 2024, there were 24 ongoing investigations that had been open for over 48 months.[4] One year later, this number decreased to 12; however, eight of these remaining cases had been under investigation for over five years.
This is a universally undesirable scenario, with prolonged uncertainty for investigation subjects, increased costs, and a strain placed on both FCA resources and the management of firms under investigation. We expect the FCA to continue focusing on closing out these long-running investigations over the next year, replacing them, for the most part, with assertive supervision as opposed to enforcement.
With fewer open enforcement cases, the FCA aims to allocate resources more effectively, enabling faster outcomes, albeit hopefully not at the cost of quality. Only time will tell if that occurs in reality.
Transparency in Investigations
Transparency became one of the FCA's most contentious issues in 2025, as it navigated the widespread backlash to its proposals to name and shame those under investigation at an early stage in its inquiries.
Under the proposals, the FCA suggested a shift away from the current "exceptional circumstances" test to determine whether to publicly announce the name of regulated and listed firms under investigation, to the lower threshold of a "public interest" test.
While the FCA described this as a measured increase in transparency to serve the public interest, the financial services industry, politicians and lawyers alike were united in criticizing what was interpreted, at its worst, as a threat to the age-old maxim: innocent until proven guilty.
In response, the FCA announced in March that it would not be proceeding with the initial proposal. The final approach was clarified in the updated enforcement guide released in June.
The exceptional circumstances test has been retained, with three additional circumstances identified where the FCA may make public announcements concerning its investigations, as follows.
- In cases of suspected unauthorized activity or criminal offenses relating to unauthorized activity, the FCA may announce and name the subjects of its investigation.
- In limited circumstances where information is already in the public domain, the FCA may reactively confirm its investigations.
- In certain cases, the FCA will reveal details of its investigations on an anonymized basis.
It did not take long before the FCA's approach was tested. In October, an unnamed firm sought a judicial review of the FCA's intention to announce its investigation. Finding in the FCA's favor, the High Court dismissed the challenge and confirmed that the FCA was not unreasonable in reaching its decision to name the firm in question.5
While it is still too early to tell how frequently the FCA will publicly announce those under investigation, the fact that its first attempt to identify a firm came so soon after the updates to the enforcement guide provides a strong indication that this is a tool the regulator is willing to use.
Transparency and the publicizing of its activities are clearly high on the FCA's agenda, and as the regulator continues to test its powers in 2026, further disclosures under the revised policy are likely.
Financial Crime Remains at the Fore
As we enter 2026, the regulated sector should be under no illusion that the FCA's desire for fewer enforcement investigations will translate to reduced engagement. In March, the FCA unveiled its 2025-2030 strategy, which identified fighting crime as one of four priorities over the next five years; the others being to support growth, help consumers and be a smarter regulator.6
Throughout 2025, the regulator's actions demonstrated that fighting financial crime remains a cornerstone of its activities. As part of her October speech, Chambers revealed that the FCA is pursuing more criminal prosecutions than ever before.
As testament to this, on Nov. 26, the FCA announced that it had brought charges against two individuals, Bobosher Sharipov and Bekzod Avazov, for insider dealing.7 A week later, on Dec. 3, the FCA charged another individual, Henrik Schliemann, with nine criminal offenses, including fraud by abuse of position, fraud by false representation and forgery.8
Increase in Financial Penalties Collected
While the number of open enforcement investigations may be down when compared with previous years, the potential financial consequences of enforcement action should not be underestimated.
A comparison of enforcement data from recent years shows that in 2024-2025, the total value of financial penalties issued by the FCA was over £186 million ($248.9 million).9 This marks a sizable increase from £42.6 million in 2023-2024, but is not quite a return to the form of 2022-2023, when the sum reached nearly £200 million.10
The increase makes sense in light of the FCA's focus on closing investigations. However, it should also serve as a timely reminder that the penalties associated with enforcement action can be significant. The largest single penalty imposed by the FCA in 2025 was £44 million,11 the most substantial fine issued by the regulator since a penalty of £107 million in August 2022.12
Cultural Concerns
Throughout 2025, the FCA continued to emphasize the importance of culture for regulated firms. In February, FCA Chief Operating Officer Emily Sheppard noted that FCA investigations into failures of consumer protection or market conduct often unearth the same root causes of cultural and governance shortcomings.
Culture drives conduct, Sheppard stressed, and as U.K. regulator for conduct, culture will undoubtedly remain a key focus for the FCA for the foreseeable future.
The amendments clarified that bullying, harassment and violence qualify as misconduct under the code of conduct and will apply to nonbanks from Sept. 1, 2026, the aim being to align the approach to nonfinancial misconduct across almost all financial services firms operating in the U.K. Under the current rules, nonfinancial misconduct more commonly breaches the code of conduct in a bank rather than a nonbank.
On Dec. 12, the FCA released final guidance on the updated rules, covering how firms should apply the FCA's code of conduct to nonfinancial misconduct, and how assessments of fitness and propriety may be affected by nonfinancial misconduct.13 Despite requests, the FCA declined to provide more case studies, instead emphasizing that the guidance cannot cover every scenario and that firms themselves are primarily responsible for preventing and addressing nonfinancial misconduct.
The most practical feature of the updated guidance is a series of flowcharts that help firms to determine when conduct falls within the scope of the code of conduct and whether it constitutes a rule breach. These tools are designed to guide firms through the decision-making process for assessing nonfinancial misconduct under the revised scope of the code of conduct.
For firms, the message is clear: Policies and procedures should be updated now, appropriately tailored training provided, depending on the level and role of employees, and a speak-up culture fostered in which nonfinancial misconduct is not tolerated.
The FCA has stated that it plans to focus on how firms are tackling nonfinancial misconduct in practice, so firms should expect enhanced regulatory scrutiny in this area in 2026.
Off-Channel Communications
In August, the FCA released its findings following a multifirm review of off-channel communications - those communications occurring outside channels subject to firm surveillance.
The review by the FCA follows the crackdown on off-channel communications in the U.S. over the last few years, which resulted in the imposition of significant financial penalties. The increased scrutiny of companies' communication practices emerged in the wake of COVID-19, when eschewing typical work patterns caused an increase in the use of off-channel communications.
The headline finding from the FCA's review was that most firms continue to uncover breaches in their internal policies governing off-channel communications. The FCA's position is unequivocal: Robust record-keeping is essential, and violations should not be tolerated.
Firms must ensure that all communications related to in-scope activities are recorded, monitored and auditable, including conversations that lead to these activities. Additionally, firms are expected to take reasonable steps to prevent employees from using unrecorded channels for these communications.
In particular, the review stressed that firms must ensure that all employees clearly understand their obligation to record relevant communications. When patterns of noncompliance arise, accountable senior management functions should act swiftly to implement corrective measures. For firms operating under a global framework, robust systems and controls must ensure adequate oversight of activities to meet U.K. standards.
2026 and Beyond
Looking ahead, we are likely to see a dual-pronged approach from the FCA this year: targeted enforcement in priority areas, together with assertive supervision focused on areas where the FCA perceives the highest risk of harm.
Fraud and financial crime will remain one of the regulator's top priorities, with insider dealing and market abuse prosecutions continuing apace. Firms' systems and controls for the prevention and detection of financial crime are also likely to come under scrutiny. Further, issues involving potential consumer detriment are likely to prompt regulatory interest, either through supervision or enforcement, or both, depending on the circumstances.
In the FCA's 2025-2026 annual work program published in April, the regulator stated that those demonstrably seeking to do the right thing will benefit from less intensive supervision. It is unclear exactly what behaviors the FCA expects to see in order to qualify for less intensive supervision, but regulated firms should ensure that they proactively monitor and review their systems and controls, focusing on regulatory priorities and high-risk areas, such as financial crime.
Regulated firms should conduct horizon-scanning exercises regularly and treat compliance as a strategic priority. Reviews, actions taken, enhancements to systems and controls and the accompanying rationales should be documented.
Taking these steps will ensure that regulated firms are well-placed to demonstrate they are seeking to do the right thing and will mitigate the risks of regulatory scrutiny.
Footnotes:
- https://www.fca.org.uk/news/statements/updated-version-our-enforcement-guide-published.
- https://www.fca.org.uk/publication/policy/ps25-5.pdf.
- https://www.fca.org.uk/publication/correspondence/letter-enforcement-diversity-tsc.pdf.
- https://www.fca.org.uk/data/fca-operating-service-metrics-2024-25/enforcement-data.
- https://www.bailii.org/ew/cases/EWHC/Admin/2025/2614.html.
- https://www.fca.org.uk/news/press-releases/fca-launches-5-year-strategy-support-growth-and-improve-lives.
- https://www.fca.org.uk/news/press-releases/fca-charges-two-individuals-insider-dealing.
- https://www.fca.org.uk/news/news-stories/fca-charges-henrik-schliemann-fraud-forgery.
- https://www.fca.org.uk/data/fca-operating-service-metrics-2024-25/enforcement-data.
- https://www.fca.org.uk/data/fca-enforcement-data-2023-24#lf-chapter-id-asset-protection-and-recovery.
- https://www.fca.org.uk/news/news-stories/2025-fines.
- https://www.fca.org.uk/news/news-stories/2022-fines.
- https://www.fca.org.uk/publications/policy-statements/ps25-23-tackling-non-financial-misconduct-financial-services.
