On 11 November 2024, the Financial Conduct Authority (FCA) in the United Kingdom announced a series of enhancements to its disclosure processes in regulatory enforcement cases. These changes follow recommendations from the Upper Tribunal in the case of Seiler and others v FCA [2023] UKUT 00133, where the tribunal suggested that the UK FCA review and improve aspects of its disclosure process to ensure fairness and transparency in regulatory enforcement.
The UK FCA has now completed this review, implementing several key changes that broaden the scope of its disclosure practices and increase support for teams involved in enforcement cases. The improvements are intended to bolster transparency and reduce the potential for any oversights in evidentiary disclosure.
The adjustments to the UK FCA’s disclosure processes include:
- Broader Approach to Disclosure: Under the new guidelines, the UK FCA’s document review will no longer solely focus on identifying materials that might undermine the case. Instead, the UK FCA will now disclose all material relevant to the facts of a case, including both potentially undermining and supportive documents. This shift aims to minimise the risk of missing any crucial information in disclosure.
- Enhanced Training and Quality Assurance: The UK FCA is increasing the depth of its training on disclosure, providing specialist training for staff responsible for managing and overseeing disclosure exercises. This includes added focus on quality assurance to ensure that documents are accurately reviewed and disclosed according to the new standards.
- Clearer Roles and Responsibilities: In an effort to streamline the disclosure process, the FCA has provided additional clarity on the roles and responsibilities of staff and managers involved in disclosure. This clarification aims to ensure that every team member understands their role in the disclosure process, thereby improving accountability.
- Increased Emphasis on Disclosure in Performance Metrics: Recognising the importance of accurate and complete disclosure, the UK FCA will now factor in disclosure practices as a measure of staff performance. By including disclosure in performance assessments, the UK FCA aims to reinforce its importance and ensure consistent compliance across case teams.
Under the revised standards, the UK FCA is obligated to disclose all documents relied upon in building a regulatory enforcement case, along with any material that might undermine the decision to take action. This obligation is now expanded to include all relevant material, barring instances where disclosure would be disproportionate, not in the public interest, or otherwise inappropriate. This approach encompasses both potentially undermining material and supportive evidence, creating a more comprehensive disclosure process that reduces the likelihood of omissions.
The UK FCA’s goal with these changes is to ensure that disclosure reviews identify all relevant material rather than focusing exclusively on potentially undermining documents. This broader approach aims to provide a more transparent regulatory process, allowing for a balanced view of evidence in enforcement cases.
To assess the effectiveness of these changes, the UK FCA plans to closely monitor its revised disclosure practices over the coming months. A follow-up review is scheduled to take place in approximately 12 months, allowing the UK FCA to evaluate whether additional steps are required to further refine and improve its processes.
(Source: https://www.fca.org.uk/news/statements/enforcement-regulatory-disclosure-review-outcome)
