Jurisdiction(s):
United Kingdom

ECCTA ‘failure to prevent fraud’: SFO–FCA co-operation, DPAs and heightened SMCR risk for senior managers at large regulated firms

Published on: 01 May 2025

Published by a Law360 reporter

Legal News

Article summary

Senior managers at financial firms identified in corporate self-reports to the Serious Fraud Office (SFO) are set to come under Financial Conduct Authority (FCA) scrutiny for any regulatory failings found, lawyers cautioned. They said probes will rely on material provided by the companies themselves, submitted in their own interests. The SFO will pass these disclosures to the financial regulator. The new offence sits within the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023). Under ECCTA 2023, large corporates will be liable where an employee or agent commits fraud for the organisation’s benefit and adequate prevention measures were absent. The regime targets businesses only, not individuals.

FCA investigations boost

We expect an increase in FCA enforcement, particularly against senior managers who breach duties under the ‘failure to prevent’ offence, drawing on what firms report to the SFO, said Jennifer Richardson, a partner at Blackfords LLP. She warned that regulators will lean on company self-disclosures when pursuing cases. Companies may face prosecution if they satisfy two of three thresholds: turnover above £36m, assets exceeding £18m, or headcount over 250. The scope captures the biggest banks, insurers and asset managers...

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