Understanding the regulator's approach
Businesses need to be very careful in their operation to observe the rules and regulations that are relevant to their industry. This can on occasion bring them into contact with regulators, either with a view to reporting on their progress in observing regulatory standards or, in more complex situations, facing an investigation by regulators on suspicion that the regulator’s code of practice has been breached. Regulatory investigations can be very taxing experiences for businesses and their staff: there is often a lack of understanding in the approach that regulators take, in what direction their investigation is going to go and how best to manage interaction with them.
We operate a highly successful investigations practice where our team act as advisers to business facing external investigation by regulators (HMRC, SFO, the FCA or indeed the police), or are pursuing internal investigations. We are able to provide detailed guidance and support to clients on any aspect of regulation. If you need to speak with a legal team that can provide cost-effective, pragmatic advice and guidance on regulatory investigations we would be delighted to help.
Understanding the regulator’s approach
Businesses operating in the financial sphere in the UK need to be conscious of the multitude of obligations that they owe to regulators in the course of their operation. These obligations can be a significant burden for businesses, but should not be treated lightly. The UK operates one of the most comprehensive and robust regulatory frameworks in the world, which has contributed to its global reputation as a financial hub. This reputation is supported and protected by a legal regime that can result in civil or criminal liability for businesses that are found to have conducted activities which threaten to undermine it.
We understand what our clients face in discharging their regulatory obligations, and the challenges they may encounter when presented with the prospect of an investigation. We have experience of assisting clients in all regulatory investigations:
Businesses undoubtedly operate in a competitive environment which puts tremendous pressure on them to secure new opportunities as quickly as possible to survive. This requirement, however, has to be treated seriously and the Serious Fraud Office (SFO) is responsible for ensuring that businesses conduct themselves properly and do not employ questionable tactics.
The SFO utilises similar tactics to that of its fellow regulators (including HMRC and the FCA). Its primary concern will be to follow a ‘paper trail’ to demonstrate illegal activity. This process needs to be managed carefully and demands for information need to be met by careful analysis by advisors who are able to challenge these with a view to ensuring only salient information is disclosed. Penalties for fraudulent or corrupt behaviour are varied and depend on the situation, but can result in either major fines being issued and even periods of imprisonment where individuals themselves are concerned.
Behaviour in the financial marketplace
Financial services as a sector is vitally important to the success of the UK economy. This fact is underlined by the responsibility attributed to the Financial Conduct Authority (FCA) in ensuring that businesses conduct themselves properly in their daily activities. The FCA polices the behaviour of firms operating in the financial sphere, and is also charged with ensuring that they do not contribute to the commission of crimes which undermine market integrity, including money laundering and insider dealing.
The FCA is known to be very aggressive in investigating suspected illegal activity, and often does so in partnership with other regulatory investigations for fear that one potential infraction is part of a wider network of criminality. It regularly calls for detailed interviews with business staff to understand the facts surrounding a situation, and also makes use its ability to confiscate important business property and paperwork in the course of its investigation. Any evidence of a breach of business’ duties to the FCA not only threaten firm’s reputation in the market, but could also severely damage the continued ability of individuals to work in financial services.