The FCA’s publication of Enforcement Watch 1 marks an important shift in how the regulator communicates enforcement risk to the market. While the FCA has stepped back from proposals to routinely name firms under investigation, Enforcement Watch signals a targeted transparency approach, designed to highlight priorities and shape behaviour – without waiting for final outcomes.

For asset managers, the first edition is revealing. It gives a window into the types of conduct the FCA is actively investigating and the themes it considers warrant public signalling.

What is Enforcement Watch and why does it matter?

Enforcement Watch a new regular FCA newsletter intended to give the market insight into:

• the nature of cases currently under investigation;
• the types of misconduct the FCA views as most harmful; and
• how enforcement priorities align with broader supervisory and policy objectives.

Although anonymised, the publication is not abstract. The descriptions of conduct are deliberately concrete. For firms and advisers, it operates as an early warning system, highlighting areas where supervisory issues are tipping into enforcement risk.

The FCA has been explicit that this form of transparency is meant to be preventative, not merely informational.

Asset Management features prominently

One striking feature of Enforcement Watch 1 is the prominence of asset management and investment-related investigations.

The FCA confirms that it has opened investigations into five firms operating in the asset management and consumer investment space, including cases involving:

• misleading statements to consumers and third parties; and
• failures to identify, manage or disclose conflicts of interest.

While not specifically linked to asset managers, the FCA also confirms that investigations are ongoing in relation to Consumer Duty breaches in relation to fair value, as well as systems and controls issues in relation to financial crime and more broadly, which are potentially relevant to the asset management sector.

Misleading communications remain a key issue

The FCA’s focus on misleading statements reflects a continuing trend in enforcement of the regulator requiring a high degree of openness, clarity, and transparency in all communications and view this as a serious conduct issue.

In the asset management context, this spans:

• fund documentation and disclosures;
• performance narratives and risk descriptions;
• communications with advisers and platforms; and
• statements made to regulators and counterparties.

This theme aligns with recent enforcement outcomes in the sector, where the FCA has taken action not only for underlying governance failures, but for how firms explained — or failed to explain — those issues to investors and the regulator.

The message from Enforcement Watch is clear: misleading communications can themselves be serious misconduct, even where the extent of losses or market impact are unclear.

Conflicts of interest — an enforcement trigger

Conflicts of interest are a recurring theme in Enforcement Watch 1, and a familiar pressure point for asset managers.

The FCA’s emphasis is not limited to whether a conflicts policy exists. Instead, the focus is on:

• whether conflicts are properly identified in practice;
• whether mitigation measures are effective and evidenced; and
• whether conflicts are clearly disclosed where they cannot be avoided.

This reflects the wider enforcement trend: the FCA is less interested in formal compliance artefacts and more interested in how conflicts policies operate in reality, particularly where remuneration, related-party arrangements or product design are concerned.

Individual accountability

Although Enforcement Watch 1 does not name individuals, its themes sit squarely alongside recent high-profile enforcement outcomes against senior figures in the asset management sector.

Taken together, these developments reinforce that:

• Individual enforcement risk attaches to governance failures; and
• senior managers’ conduct, candour and oversight remain central to FCA enforcement decision-making.

For asset managers, this raises the stakes around documentation, escalation and engagement with the regulator — particularly once issues move from supervision into enforcement territory.

How Enforcement Watch fits with the wider FCA strategy

Enforcement Watch 1 complements:

• the FCA’s updated Enforcement Guide, which retains a high bar for “naming and shaming” firms, but emphasises deterrence and education;
• the regulator’s continued focus on financial crime, market integrity and consumer outcomes; and
• a broader shift toward earlier visibility around intervention, before cases reach final resolution.

Enforcement Watch can be seen as a bridge between supervision and enforcement — highlighting where and why the FCA believes risks have crossed a line.

Practical implications for asset managers

For asset managers, Enforcement Watch 1 points to several practical conclusions for 2026/27:

• Communications are a key area of enforcement risk.
• Conflicts frameworks must work in practice.
• Governance and escalation decisions may be judged years later through an enforcement lens.
• Early engagement and remediation remain critical once issues attract supervisory attention.
• The FCA is prepared to signal concerns publicly, even where it is not yet willing to name names.

Conclusion

Enforcement Watch 1 is a relatively informal publication, but the substance is significant. For asset managers, it provides a key real time indicator of where enforcement risk is crystallising and why.

The FCA’s message is not that enforcement has become more aggressive overnight, but that expectations around conduct, communications and governance are being enforced more visibly.