Tom Stocker: SFO and FCA signal tougher stance on financial wrongdoing

Tom Stocker: SFO and FCA signal tougher stance on financial wrongdoing

Tom Stocker

The UK’s Serious Fraud Office (SFO) has indicated that it intends to utilise existing but less commonly used powers to grant immunity notices to offenders who assist in its cases, and support reduced sentences to defendants who provide evidence to enable other prosecutions, writes Tom Stocker.

In parallel, the Financial Conduct Authority (FCA) stated that firms should expect more assertive supervision and enforcement, that they will speed up investigations and that firm’s will be increasingly named when an enforcement investigation is opened.

Businesses should take note following a speech at the Royal United Services Institute from Nick Ephgrave, the newly appointed director of the SFO, which marked a reset in how the SFO will be going about its business, and included several notable themes businesses should take on board in relation to how the most serious financial crime investigations could be handled by the agency in future.

Firstly, the director gave a clear indication that the SFO will be looking to make use of immunity orders for offenders who are prepared to assist the SFO with investigations and prosecutions. This will likely be targeted at lower-level employees willing to give evidence against more senior managers, directors and ultimately their company or firm. Immunity orders have existed for some time but they are rarely used - that looks set to change.

Secondly, Mr Ephgrave has come out in favour of financial incentives for whistleblowers, departing from previous SFO orthodoxy. While this would require legislative changes, given ongoing reviews of whistleblowing protections more widely the SFO director’s intervention in the debate is significant in its timing.

Mr Ephgrave also stated he plans to introduce a new review process on active cases to make them more focused and the need for speed was a recurring theme in the director’s speech, with great emphasis placed on speeding up case progression and making swifter decisions.

The SFO’s director’s speech was followed by a speech by Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, in which she stated that the FCA will deliver impactful deterrence though enforcement activity. The FCA are also wishing to adopt a new approach of publishing enforcement investigations when they commence.

Many practitioners consider publication of investigations would undermine the presumption of innocence and be unfair to the subjects of an enforcement investigation where wrong-doing may not be established. However, the director was in robust voice saying: “the first rule of enforcement club is that you do in fact talk about enforcement club.”

Recent cases show the agencies are going to take decisive and uncompromising action. UK businesses and their directors and lawyers should expect increased, quicker and more robust enforcement, coupled with greater publicity, in the years ahead.

Ms Chambers told the audience that she and her co-director are known as the “Bad Cop, Bad Cop double act”. If bad is taken to mean robust, the same can be said about the SFO and FCA directors.

From the defence side, we look forward to the “Good Fight”.

Tom Stocker is a partner at Pinsent Masons

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