On 23 October 2025, the High Court delivered its judgment in R (on the application of CIT) v Financial Conduct Authority [2025] EWHC 2869 (Admin). The Court considered the interpretation and application of chapter 4.1 of the FCA's Enforcement Guide (ENFG), which sets out when the FCA may announce investigations. This is the first challenge to the FCA's approach to publicising investigations since it published its updated version of ENFG in June 2025.
Background
In February 2024, in an attempt to achieve greater transparency, the FCA consulted on a fundamental change to its approach to publicising investigations by replacing its 'exceptional circumstances' test with a "public interest decision-making framework", dubbed by many as a 'name and shame' policy. There was widespread criticism of the proposals, leading to a revised consultation in November 2024.
In its June 2025 policy statement, the FCA noted a "lack of consensus" and confirmed it had decided to keep its 'exceptional circumstances' test, with the addition of a limited number of instances in which it could make announcements.
When can the FCA announce an investigation?
In summary, the FCA has three options:
- no announcement (Option 1)
- an anonymised announcement (where it announces an investigation without naming the subject) (Option 2)
- a naming announcement (where it identifies the subject of the investigation) (Option 3).
ENFG 4.14G provides guidance on the 'exceptional circumstances' test, noting the FCA may make a public announcement about an investigation if it considers such an announcement desirable to:
- maintain public confidence in the UK financial system or the market
- protect consumers or investors
- prevent widespread malpractice
- help the investigation itself
- maintain the smooth operation of the market.
In reaching a decision to make a public announcement under the test, the FCA will consider the potential prejudice that it believes may be caused to anyone who is, or is likely to be, a subject of the investigation.
Facts
The claimant, referred to anonymously as "CIT", is an FCA regulated firm. The FCA notified CIT that it had appointed four investigators under section 168 of the Financial Services and Markets Act 2000 and notified CIT of this by letter. To preserve CIT's anonymity, the judgment does not disclose the subject matter or what triggered the investigation.
The FCA decided to publicly identify CIT as the subject of an investigation (Option 3). CIT challenged the decision, arguing this would cause prejudice and be unlawful and unreasonable.
CIT subsequently brought judicial review proceedings on the basis that the FCA's decision was unlawful because it had materially misinterpreted the provisions of ENFG as to when an investigation should be announced and when the name of the firm under investigation should be disclosed, or alternatively, that it had reached an unreasonable decision, either as to outcome or the reasoning process.
Decision
The High Court granted permission for judicial review on both grounds but dismissed the claim for judicial review, finding that the FCA's decision to issue a naming announcement was neither unlawful (there was no material misdirection in the FCA's interpretation of ENFG) nor unreasonable (there was no unreasonableness in either its decision or reasoning).
Key findings
Unlawfulness
The Court confirmed that there were three points which underpin a correct interpretation of ENFG and which were therefore key to determining the grounds of unlawfulness:
- The baseline for exceptionality is to be measured against "investigated situations" rather than "regulated situations" (ie whether a regulated situation is sufficiently serious to justify an investigation).
- The desirability of Option 3 (a naming announcement) should be judged against the two other alternatives available to the FCA: Option 1 (no announcement) and Option 2 (an anonymised announcement).
- In its approach to the exceptionality, the FCA must advance reasons that are relevant to naming, not just announcing.
The High Court did not accept CIT's argument that the FCA had misinterpreted ENFG. It noted that CIT "was unable to point to any sentence or passage within the reasoned Memorandum [a reference to the second of two memorandums prepared by the FCA's case team, which recommended Option 3] which misstates the objectively correct interpretation" of ENFG.
In reaching this finding, the Court acknowledged that the FCA's reasoning was "composite" rather than following a sequenced approach, but did not find that this indicated an error of interpretation.
Reasonableness
In addressing 'outcome unreasonableness' and 'process unreasonableness', the Court framed its approach by reference to the explanation in R (Finch) v Surrey County Council [2024] UKSC 20 [2024] PTSR 988. The claimant had to show that the decision was unreasonable "in the sense either that it is outside the range of reasonable decisions open to the decision-maker or that there is a demonstrable flaw in the reasoning which led to the decision".
The High Court explained that a critical feature of this case, referred to as the "key theme", was the FCA's assessment of what was the most effective regulatory course of action to ensure consumer protection. In this case, the FCA considered the need to communicate a message across to the claimant's customers "sooner and not later." There were also considerations of the sector as a whole.
The FCA determined that a naming announcement was desirable when compared to the alternatives of customers being unaware of the investigation (including receiving a letter from the claimant) or a generic anonymised announcement, and any potential prejudice to the claimant was outweighed by the "public interest regulatory virtues".
While recognising that there were criticisms of the FCA's reasoning, the Court found that the "key theme" was "fatal to the [c]laimant's reasonableness challenge" and concluded that there was neither outcome unreasonableness nor process unreasonableness.
Implications
- The judgment provides helpful commentary on the interpretation of the FCA's 'exceptional circumstances' test in ENFG 4.1.4G.
- While it confirms that a high threshold must be met for the FCA to name a firm under investigation, it serves as a reminder of the FCA's ability to name a firm it is investigating. It is also worth noting that the FCA has recently created a webpage listing publicly announced investigations.
- The case illustrates the importance the FCA attaches to maintaining consumer protection when assessing whether transparency overrides any potential prejudice to a firm.
- If a firm is notified that it is under investigation, it should engage early with the FCA to determine its approach to making any announcement and its reasoning. This will give the firm the best opportunity to challenge the FCA effectively if appropriate.
- Only Part 1 of the judgment has been made public. Part 2 may be published if there is no appeal and may contain further detail on how a court approaches its assessment of the FCA's decision to name a firm under investigation.
Help is at hand
If you have any questions or concerns regarding the High Court's judgment, please do not hesitate to get in touch with one of our experts.
