Regulator investigation · UK
What happens when your firm is investigated by the regulator
Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Published 15 July 2026
Regulator investigations trigger cascading operational, financial, and reputational consequences. Understanding the process and PI interaction matters.
Common investigation triggers
- Client complaint via regulator complaint scheme.
- Self-reporting under SUP 15 (FCA) or equivalent.
- Thematic review or targeted supervision.
- Referral from another firm or professional body.
- Public interest disclosure.
- Post-claim regulator scrutiny.
The investigation stages
- Notice of investigation from regulator.
- Initial information request — documentation.
- Formal interview of principals, directors, or key staff.
- Expert or technical review where relevant.
- Provisional findings communication.
- Firm response opportunity.
- Final decision and any enforcement action.
PI insurance interaction
- Standard PI covers defence costs for regulatory investigations — check wording.
- Some PI wordings exclude regulator-initiated investigations.
- Legal expenses cover may be needed as extension for some firms.
- Fines and civil penalties usually not covered by PI (public policy).
- Compensatory awards to third parties usually covered.
- Notification obligations apply as normal.
What firms should do
- Notify PI insurer within notification-clause deadline.
- Engage specialist regulatory counsel.
- Preserve all relevant documentation.
- Don't communicate directly with regulator without counsel review.
- Document business impact for future claim purposes.
- Broker involvement essential from notification through resolution.
By regulator
- SRA: intervention, undertakings, disciplinary action, referral to Solicitors Disciplinary Tribunal.
- FCA: supervisory action, enforcement, fines, permission variations.
- ARB: misconduct proceedings, removal from register.
- ICAEW: investigation, disciplinary proceedings, sanctions.
- RICS: disciplinary panel, removal from register, fines.
- FOS: not a regulator but often precedes regulator action.
Frequently asked
Does PI cover regulator fines?
Public policy prevents PI covering criminal or regulatory fines. Compensatory orders are usually covered.
Can I refuse to cooperate?
Usually not — regulator has statutory powers. Refusing typically compounds the situation.
How long do investigations take?
6-24 months typically. Longer for complex cases.
What if I disagree with the findings?
Formal challenge procedures exist. Regulator-specific — consult counsel.
Does the regulator report to my professional body?
For solicitors, ARB, IFAs, etc. — often yes. Others: sector-specific.
Should I notify clients?
Only where regulator or counsel advises. Depends on the specific circumstances.
Related
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. Registered in England and Wales, company number 07014570.