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A New Day “Dawning”: Uptick in Dawn Raids by the United Kingdom Financial Conduct Authority

By Brittany Harwood and Lara McMahon*

No matter the regulator, a series of enforcement officials and agents appearing unannounced to conduct an investigatory raid of a company’s place of business may be most companies’ worst nightmare. Although dawn raids still remain relatively rare, the United Kingdom’s Financial Conduct Authority (“FCA”) reported a significant increase in the use of this investigation tactic in 2018. The FCA serves as the regulator for approximately 59,000 financial services firms in the UK and has three operational objectives: to protect consumers, to protect and enhance the integrity of the UK financial system, and to promote effective competition between financial services providers.1 One of the ways in which the FCA implements these objectives is through the use of investigative mechanisms such as “dawn raids.”

Over the course of just a year, the number of dawn raids conducted by the FCA nearly doubled, jumping from 13 in 2017 to 25 in 2018.2 This is the highest number of dawn raids since 2010, when the FCA conducted a total of 36 dawn raids in the wake of the global financial crisis. This increase is even more striking due to the fact that the FCA seemed to disfavor this practice between 2014 and 2016 when the number of dawn raids dipped into the single digits.3

One possible explanation for the recent increase is that the conclusion of major investigations such as the Libor rigging scandal has allowed the FCA to broaden its focus and open a greater number of investigations.4 Indeed, the number of new cases opened by the FCA jumped from 420 in 2017 to 504 in 2018.5 The increase in raids has thus tracked an overall increase in the FCA’s investigatory activity in general.

Another possible explanation is that the FCA is looking to combat recent bad publicity by opening more matters that garner public attention, as is always the case when a firm is raided by an enforcement agency. In the past, the FCA came under fire for its failure to prevent the collapse of London Capital & Finance (“LC&F”).6 In response, the FCA’s Board agreed to subject the organization to an independent investigation focused on the FCA’s supervision of LC&F, only the second time in history that the FCA has been subject to an independent investigation concerning possible regulatory failures.7 The independent investigation is on-going, and the FCA’s recent increase of investigation and enforcement activity may well be a response to the negative view of the FCA’s prior enforcement efforts.8

Brexit may serve as another factor driving the FCA’s new approach to enforcement. In its Business Plan for 2019-2020, the FCA detailed its top priorities in anticipation of Brexit: “[s]upporting a smooth transition post-Brexit[,] [s]trengthening our international engagement with fellow regulatory bodies[,] [and] [a]ssessing [the] impact of EU Withdrawal on the industry and consumers.”9 The FCA will need to consider the future of regulation to ensure that the regulatory landscape in the UK is fit for any new challenges it may face post-Brexit. Therefore, the FCA’s role in shaping financial regulation both in the UK and internationally takes on heightened importance. The increase in the number of dawn raids, and in the FCA’s investigatory activity generally, sends the message domestically and internationally that the FCA will continue to crack down on businesses and individuals engaging in unregulated investments.

At minimum, companies with a presence in the UK should be cognizant of the FCA’s increased use of dawn raids as an investigation tool. Dawn raids are not unique to the FCA, and are used by regulators around the world, including U.S. Department of Justice prosecutors in connection with the Federal Bureau of Investigation and European Competition authorities. Although on the whole, dawn raids are still relatively uncommon, they are incredibly disruptive to the company’s business, stressful for company personnel involved, a drain on resources in terms of time and expenses needed to comply with requests that come with a raid, and often draw negative attention and publicity.

Companies in highly regulated industries, such as the financial sector, should consider taking the following steps to ensure that they are prepared in the event of a dawn raid or similar investigation tactic employed by enforcement bodies. First, companies should provide training for all personnel likely to come into contact with government enforcement agents or attorneys during any form of planned or unplanned raid or other investigation event. Training should include informing employees within the company, such as the Legal or Compliance Department, of their requirement to cooperate and not inadvertently obstruct a raid, the limits on the authority of regulators, and the prohibition on altering, destroying, concealing or otherwise removing documents sought during a government raid or investigation. Second, companies should provide additional training to IT personnel so that they are clear on the location of their data and prepared to coordinate the transfer of appropriate electronic data in the instance of a dawn raid. Finally, companies at risk for such an event, whether a dawn raid or other unplanned investigation tactic by regulators, should have a basic plan of response, including contacting outside counsel, to address the raid and any subsequent demands made by enforcement authorities, and, if at greater risk for this type of event, should consider testing that plan of response by conducting a mock raid or simulated event.

Visit our website to learn more about V&E’s Government Investigations & White Collar Criminal Defense practice. For more information, please contact Vinson & Elkins lawyer Brittany Harwood.

*Lara McMahon is a law clerk in our Washington DC office.

1 Business Plan2019/20, FIN. CONDUCT AUTHORITY, Apr. 17, 2019, at 6,

2 Letter from Financial Conduct Authority, Information Disclosure Team (Feb. 22, 2019),

FCA Raids Nearly Double in a Year as Regulator Targets Unregulated Investments, FINTECH TIMES (Apr. 29, 2019),

4 Sinead Cruise, Britain’s Anti-Fraud Body Closes Investigation into Rate Rigging at Lloyds, REUTERS (July 4, 2018, 8:11 AM),

5 Caroline Bingham, UK’s Financial Watchdog Launches Most Dawn Raids for a Decade, FIN. TIMES (Apr. 28, 2019, 7:01 PM),

See Nils Pratley, The FCA’s Supervision of LC&F Is Finally Being Investigated, GUARDIAN (Apr. 1, 2019, 7:01 PM), (“[T]he now infamous investment firm collapsed owing £236m to 11,000 people, may be one of the worst regulatory failures on the watch of the Financial Conduct Authority, the body established in 2013 to do better than its derided predecessor.”).

2019/20 Business Plan, supra note 1, at 3.

8 Patrick Collinson, ‘One of the Biggest Financial Scandals Around’: FCA Criticised Over LC&F, GUARDIAN (Mar. 29, 2019, 2:00 PM),

2019/20 Business Plan, supra note 1, at 8.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.