Enforcement is the highest profile regulatory tool, but also perhaps the most easily misunderstood, and certainly the hardest to interpret. These latter two characteristics stem from two factors:

1. The long and unpredictable timeline of cases (e.g. It's only recently that Enforcement action in the Co-op case was completed).

 2. Finite resources mean that only a limited number of cases can be active at a given time, and the range of selection factors in play dictates that the FCA's portfolio of cases will not necessarily reflect it's priorities.

 Nevertheless, the approach document continues a number of long running trends and cycles in how the regulator uses its enforcement powers and it's worth taking a wider look at some of these.

For its first decade, through to 2008, the FSA was clear that it was "not an enforcement - led regulator". However, there was a sense that opportunities were being passed up (e.g. over PPI) and concern that, for some, enforcement had become simply a cost of doing business. From 2008, therefore, the new mantra became "credible deterrence", signalling a more active policy. 

This shift can be overstated - the advent of the financial crisis with its associated conduct scandals means there would always have been more and bigger fines during this period, while opportunities could still be missed - see the Enforcement section of the RBS Report. But the approach was discernibly different and there was, for example, a greater willingness to take criminal action against individuals.

This second phase lasted until the end of 2014, when the new FCA strategy began emphasising market-wide over more firm-specific tools, seeming to dampen the appetite to take on major Enforcement cases. Again, however, the picture was obscured, this time by the need to follow through on a series of market abuse cases, notably around fx benchmark fixing.

Now, with this approach document and it's interpretation of the Mission's emphasis on delivering public value, this pendulum appears to be swinging back towards a better balance of firm deterrence. In the wider context, this is something firms should welcome, especially if it comes with the promised greater levels transparency and evaluation. 

There remain, however, at least four issues that hover over the FCA's use of Enforcement that are bottomed out by the approach document:

1. How important will SMCR be in shaping the future portfolio of cases? The first cases under the new accountability regime have yet to emerge from the enforcement pipeline, and it will be fascinating to see the extent to which they change the game in the way Parliament and regulators hope.

2. A high proportion of cases are settled early by the firm or individual involved in return for a discount on the fine. This has significant advantages of cost and time for the regulator but is not the most transparent process, and it's easy to envisage a scenario in which it could backfire, with public opinion taking a dimmer view than the FCA of a particular transgression and being dissatisfied with the justice meted out.

3. One of the most high risk acts for a regulator is to be willing to lose an Enforcement case. However, in the absence of such willingness there will always a feeling (even if not accurate) that only the cast iron cases are being take. This is difficult for a regulator to address in an approach document but at some stage it will become a live issue again, as it did in the years leading up to the crisis.

4. Finally, it would be remiss not to touch on financial crime, where the UK regulators have, in broad terms, taken a less aggressive approach than their US equivalents. The subject is complex and nuanced, and aggression is by no means necessarily the best answer. But, given the wider environment, it's hard not to imagine the FCA strategy being challenged over the coming years. 

This approach document moves the Enforcement debate on, and again it's good to see the FCA set out its current thinking. However, it's important this is the start of the debate not the end, and that the FCA continues to explain its approach and to build industry and public understanding and support. Otherwise, at some stage, when it's most needed, it might be found wanting.