"These material changes announced by the FCA are obviously a reaction to the significant concerns expressed by a number of regulated firms in relation to the FCA’s drive for greater transparency in enforcement investigations.
"The FCA is now proposing to consider the potential negative impact on firms under investigation, as well as the potential for disruption of public confidence in the financial system or market, as part of the public interest test when weighing up whether to announce an investigation.
"These changes will no doubt be welcomed by regulated firms, albeit it remains to be seen how the FCA will implement these proposals in practice. Any firm under investigation by the FCA would likely argue that the announcement of such investigation before its conclusion would negatively impact it.
"The FCA also now intends to give firms advance notice of any announcement of an investigation against them which will provide such firms with the opportunity not only to make representations to the FCA against the announcement but also to take formal steps to prevent the announcement ahead of time. That is a potentially very significant development and, if the changes are implemented, we can expect to see firms under investigation making good use of that opportunity."