High Court Dismisses Challenge To Naming Announcement By The FCA

The High Court has dismissed the first judicial review challenge to the Financial Conduct Authority's (FCA) interpretation and application of the "exceptional circumstances" test set out in its Enforcement Guide (the Guide): CIT (an anonymised company)) v Financial Conduct Authority (No.1) [2025] EWHC 2614 (Admin). The test governs when the FCA may publicise whether or not it is investigating a particular enforcement investigation, including by naming the firm under investigation (Naming Announcement).

Key points

• The court is the primary decision-maker on interpretation of regulatory documents, applying an objective correctness standard rather than deferring to the judgment of the public body.
• The judgment provides helpful points on interpretation of the "exceptional circumstances" test governing when the FCA can publicise an investigation.
• The court identified weaknesses in the structure of the FCA's reasoning but ultimately they did not justify the court interfering with the evaluative regulatory judgment that the desirability of consumer protection via a Naming Announcement outweighed potential prejudice to the claimant.

Background

The case was heard with an anonymity order and reporting restrictions in place. This blog post is based on Part 1 of the judgment. Part 2 of the judgment contains further detail but remains subject to restrictions pending any appeal.

The case follows a period of significant interest in publicity around investigations. In April 2024, the FCA consulted on proposals to "name and shame" the subjects of its investigations based on a more flexible "public interest framework" as opposed to the existing and stricter "exceptional circumstances" test. The proposal faced significant backlash from across the financial services sector (see our blog post here), leading to a revised consultation which required the FCA to consider the potential impact on relevant firms and markets and extended the notice period ahead of publication from 24 hours to ten days. However, among others, the House of Lords Financial Services Regulation Committee in its report, Naming and shaming: how not to regulate, remained unconvinced that the regulator's proposal struck "an acceptable balance between realising the potential benefits to consumer protection and transparency, and managing the potential risks to firms, inpiduals, and market stability". Ultimately, in June 2025, the FCA formally abandoned its proposal to amend the exceptional circumstances test for regulated firms citing stakeholder concerns and lack of consensus (see our blog post here, and you can listen to our podcast here).

Judgment

Both grounds for judicial review were granted permission.

Interpretation of the Guide

The claimant alleged that the FCA had materially misinterpreted the Guide, and since interpretation is a matter for the court, Fordham J applied a standard of objective correctness.

Under section 4.1 of the Guide, the FCA has three options:

1. No Announcement as the baseline position where the fact of the investigation is not made public.
2. Anonymised Announcement reveals the fact of the investigation without naming the subject.
3. Naming Announcement identifies the subject of the investigation.

Departure from the baseline position can only occur in "exceptional circumstances" where "such an announcement is desirable to" meet a set of five objectives:

1. maintaining public confidence in the UK financial system or the market;
2. protecting consumers or investors;
3. preventing widespread malpractice;
4. helping the investigation itself, for example by bringing forward witnesses; or
5. maintaining the smooth operation of the market.

In deciding to make an announcement, the FCA is also required to consider potential prejudiceto relevant persons subject to or likely to be subject to the investigation.

The claimant highlighted three points of interpretation, all of which were accepted by the court and the FCA.

1. Exceptional circumstances means exceptional relative to other investigated situations, rather than simply concluding that a regulated situation serious enough to merit an investigation is exceptional (described as cohort-relative exceptionality). This became clear during the FCA's consultation process discussed above, but was surprising to a number of market participants who understood exceptional circumstances to have a more objective meaning.
2. The desirability of a Naming Announcement is to be assessed against both alternatives of an Anonymised Announcement and No Announcement.
3. The exceptionality justifying a Naming Announcement is also to be assessed against both alternatives, with reasons for naming being required in addition to reasons relevant to merely announcing.

The claimant argued that the FCA had failed to consider cohort-relative exceptionality and to assess the desirability and exceptionality of a Naming Announcement as against its two alternatives in the Guide. The court rejected that argument and held that there was no material misdirection in the interpretation of the Guide. It noted that the memorandum setting out the detailed reasons for the decision did not contain any misstatement of the Guide and its composite reasoning had to be read as a whole.

The court observed that there was no ground of claim based on the structure of reasoning and no submission that sequenced reasoning, ie addressing publication and then naming as distinct topics, was required for the decision to be lawful and reasonable (although Fordham J questioned whether such an approach may have been better or clearer). Ultimately the court concluded that the desirability and exceptionality assessments in the memorandum were not confined to whether or not to announce; they squarely embraced considerations regarding whether or not to name.

Whether the FCA reached a decision which was unreasonable as to "outcome" or as to its reasoning "process"

The court also rejected this ground, concluding that the decision was within the range of reasonable decisions open to the decision-maker and there was no demonstrable flaw in the reasoning process.

The key theme underpinning the court's reasonableness review was the FCA's regulatory reasons for communicating a message specifically to alert the claimant's customers, so that they could consider their options. The Naming Announcement was considered to be the appropriate course of action with public interest regulatory virtues to better protect CIT's customers with clearer communication as opposed to the alternatives. This option was assessed as being desirable as compared to customers remaining ignorant of the investigation or receiving a generic anonymised announcement.

Further, the memorandum did not understate the prejudice to the claimant. It identified the heads of prejudice but considered them to be outweighed by the assessed desirability of making a Naming Announcement in light of the specified objectives in the exceptionality test.

The court refused to grant the claimant permission to appeal, but it still has the option to seek permission from the Court of Appeal. The FCA has undertaken not to make the Naming Announcement until the earlier of (i) the expiry of time to file for permission to appeal or (ii) a decision on it by the Court of Appeal.

Comment

Although the court acknowledged some weaknesses in aspects of the FCA's reasoning, when viewed as a whole, they did not justify the court interfering with the evaluative regulatory judgment of the decision-maker. However, the criticisms directed at the structure and form of the reasoning are worth noting, and will hopefully encourage the FCA to adopt a more structured and sequenced approach to reasoning in the future.

Interestingly, the judgment records that the claimant was given only 24 hours' notice, but makes no observation on this other than noting there was no procedural unfairness challenge before the court. The House of Lords Financial Services Regulation Committee in its report on Naming and Shaming had voiced its view that giving firms "24 hours' notice of the announcement of an investigation was insufficient given the amount of activity required to prepare for such an announcement". In its revised consultation, the FCA had proposed that it would typically provide entities with ten business days to make representations. Crucially, current guidance does not indicate any specific notice period.

While we do not expect a large number of FCA investigations into regulated firms to be publicised, firms should be alive to a risk where there is a serious consumer protection issue. Given the level of interest in these issues, this may not be the last say the courts have on publicity around regulatory investigations.

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