In Conversation: Annual Enforcement Review
Published: 24 July 2025
5 minute read
In our latest In Conversation podcast, Kate O’Neill, Director of Stakeholder Engagement and Corporate Affairs, is joined by Elizabeth Barrett, Executive Director of Enforcement & Executive Counsel, to discuss the latest Annual Enforcement Review, the ongoing End-to-End Enforcement review, and how this will shape the future of Enforcement at the FRC.
Transcript
0:09
Hello there, and welcome to another FRC in conversation.
0:13
My name is Kate O'Neill.
0:14
I'm the Director of Stakeholder Engagement and Corporate Affairs at the FRC.
0:19
And today I'm joined by Elizabeth Barrett, Executive Legal Counsel and Executive Director of Enforcement here at the FRC.
0:28
Welcome, Elizabeth.
0:30
Hello everyone.
0:31
Today marks the day of an important publication for the FRC, the Annual Enforcement Review, which I know many of our subscribers and listeners really anticipate as it does give a fantastic not just update, but a look at the activities of the Enforcement Division at the FRC and this year's review.
0:55
Elizabeth highlights a strong focus on timeliness with 90% of initial investigation reviews concluded within two years.
1:04
What have you and the team done or what strategies have you used to enable this to happen?
1:10
So this has been a process which we've been working on over a number of years and we've made a significant number of changes.
1:19
The division has grown in size since I joined, although in fact it has slightly reduced in headcount.
1:28
More recently.
1:30
We've also changed our internal approaches and procedures.
1:36
And importantly, we have worked very hard on the focus of our investigations so that what we are concentrating on is breaches which we consider to be serious or significant.
1:52
We've also been working with firms so that increasingly firms are conducting their own self reviews, making admissions and generally being proactive.
2:08
And so together we have managed to improve timeliness.
2:14
Elizabeth, we have spoken over the years about this.
2:17
And you do mention the human dimension of enforcement.
2:21
How does the fic ensure fairness and transparency for individuals and firms throughout the investor good of process?
2:29
So I think the first thing I would say is that we need to be careful not to treat this just as a process driven by a KPI.
2:40
We need to keep very much in mind that what we do involves real people, both the public interest and, of course, the subjects of our investigations.
2:52
Just giving you a few examples of our approach to fairness and transparency, and I would encourage people to look back on the section on proportionality in last year's annual review as well.
3:05
We do not approach an investigation as an ambush or a memory test.
3:13
We explain the questions that we have, and if we find that those questions have reached the level of concerns, we make that clear.
3:24
We provide opportunities for subjects to prepare and respond thoughtfully.
3:29
So, for example, when we interview, we provide interview bundles in advance.
3:35
We conduct interviews and they tend to be not the rather aggressive, I put it to you type cross examination that people see in films, but actually a dialogue designed to understand what happened and why.
3:54
Interviewees have an opportunity to review the transcripts and to add to them.
3:59
We then produce an investigation report where we set out what our concerns are and what those concerns are based on and all our subjects have an opportunity to provide their comments or representations.
4:14
When we receive those representations, they're considered very carefully.
4:19
They're considered from an objective perspective.
4:22
We adjust our thinking appropriately as things have been explained to us and ultimately our views are tested in front of an independent tribunal to the extent that our subjects disagree with our conclusions.
4:43
We all know, Elizabeth, that the things that draw the most public attention are financial sanctions because it's obviously about money.
4:53
But the review this year emphasises that they are just one metrics.
4:57
How do you balance public expectations with the need for nuanced proportionate outcomes and what other metrics are available?
5:06
So I think the issue with looking at financial sanctions is not trying to extract a trend analysis based on what happens on a year to year basis.
5:22
And the reason for that is because each year the amount of the financial sanctions imposed is subject to a large number of variables.
5:32
How many investigations have been resolved in the year?
5:37
How serious or significant were the findings in each of those investigations?
5:44
And so I would definitely suggest that people should not look at any change between one year and another as indicating that we are becoming more focused on financial sanctions or less focused on financial sanctions.
6:02
In terms of other metrics, we look at timeliness.
6:05
Timeliness is important and we've been working hard on that.
6:08
As we've discussed, we look at the extent to which behaviours have changed.
6:14
In part, that relates to our contribution to the role of the FRC as an improvement regulator, helping other stakeholders to understand how to avoid issues and improve the quality of audit.
6:31
In part, those behaviours are working with us to resolve matters by demonstrating self-awareness and a willingness to accept when issues have arisen and also remediate them as soon as possible.
6:49
Looking to outcomes based assessment for enforcement I think is much harder because one never knows what the counterfactual is.
7:00
And it's very difficult for me to point to enforcement activity in isolation from all the work that we do at the FRC and say that it's because of that particular activity within the Enforcement division that there has been a particular consequence other than of course the published outcomes of our own investigations.
7:25
And of course, the final metric, the acid test, is when our cases are taken to an independent tribunal, does the independent tribunal uphold the allegations which we've made?
7:39
The FRC has announced and also been undertaking some engagement in relation to the End to End enforcement Review, also known as E2E, which is a major initiative across the FRC, including mainly the supervision and of course the enforcement divisions.
7:58
How do you envisage it shaping the future of enforcement at the FRC?
8:04
So to me the most powerful output of the end to end enforcement process, other than the necessary review and refreshing of our processes generally is our desire to provide a graduated range of options to achieve a resolution of issues.
8:29
And we see that is really important to enabling us to be proportionate depending upon the facts and circumstances of each particular case.
8:39
We're very much looking forward to issuing and bringing all this out for public consultation later in the year.
8:48
And I guess building on that and looking ahead, how will FRC continue to adapt its enforcement approach to meet the evolving needs of the market while maintaining public trust and regulatory effectiveness?
9:03
So I think we can look at things on a a micro and a macro basis.
9:07
On a micro basis within the division, we are constantly reviewing the way that we do things.
9:15
We review, we conduct a case review at the end of each investigation to see what we've learnt from it.
9:22
We have discussions with firms to share learnings after investigations have been resolved, and we will continue to do that.
9:32
That's very important.
9:34
I think on a macro level, we need to keep abreast of developments as the FRC.
9:41
We need to be bold enough to be proactive, to adapt our approaches when necessary.
9:48
We need to listen, and we need to listen objectively.
9:52
But above all, we need to ensure that we have the tools and the powers to enable us to respond appropriately to market needs, all the time keeping the public interest front of mind.
10:05
Thank you, Elizabeth, and I really commend this year's report to all our listeners because there's some great information, not just building on the themes you've mentioned, Elizabeth's, but some case studies that really bring to life the enforcement process, the approach that you've described in today's podcast.
10:24
So thank you, Elizabeth.
10:26
Thanks very much, Kate.
10:27
And I do commend the annual enforcement review to everyone.
10:32
I hope people find it interesting and informative.