FRC’s Enforcement Machine Picks Up Pace as It Eyes a Smarter Future

Key Takeaways

• Enforcement Efficiency Improving: The FRC resolved 90% of applicable investigations within two years, well above its 50% KPI and a sharp improvement from 53% the previous year.
• Sanctions Total £14.5M: Financial sanctions issued in 2024–2025 reached £14.5 million, with nine cases settled, two closed with no further action, and 12 resolved through constructive engagement.
• Recurring Audit Failures Persist: Common issues included lack of scepticism, insufficient audit evidence, ethical compliance lapses, and poor understanding of business context.
• New Tools on the Horizon: The FRC’s End-to-End Enforcement Review aims to introduce a more flexible, graduated range of responses, with a public consultation expected later in 2025.
• Doing More with Less: Despite a reduced headcount (64, down from 70), the FRC maintained strong performance and continued to push for more adaptable and timely enforcement.

Deep Dive

The UK’s audit and accounting watchdog is not only staying busy, it’s getting faster, leaner, and more strategic. That’s the story behind the Financial Reporting Council’s newly published 2024–2025 Annual Enforcement Review, which offers a candid look at the regulator’s performance over the past year and hints at big changes on the horizon.

Now in its seventh edition, the Review gives an inside look at how the FRC is handling misconduct in audit and corporate reporting. The numbers alone tell a compelling story of a smaller enforcement team (down six people from the year before) managed to wrap up a majority of cases ahead of schedule, all while pursuing a more proportionate and pragmatic approach to discipline.

Over the past year, the FRC:

• Resolved nine cases through settlement,
• Closed two investigations with no further action,
• Addressed 12 matters via constructive engagement, a path typically reserved for less serious failings,
• Opened eight new investigations into auditors and accountants, and
• Issued £14.5 million in financial sanctions, substantially less than last year’s £48.2 million (pre-discount).

The numbers might be down, but that doesn’t mean the problems are going away. The Review flags a familiar set of issues plaguing audit work: weak professional skepticism, failure to fully understand the business under review, compliance gaps with ethical requirements, and a recurring struggle to obtain and document sufficient audit evidence.

It’s not just about calling out these failings. The FRC continues to frame its enforcement activity as a tool for systemic improvement, not just punishment. And that brings us to the most forward-looking part of the report.

Rewriting the Rulebook

At the heart of this year’s update is the FRC’s End-to-End Enforcement Review, an internal overhaul aimed at rethinking the entire enforcement process—from the first red flag to the final press release.

Why the rethink? According to the FRC, it’s about making the system more flexible and fit for purpose. The goal is to introduce a “graduated range of regulatory responses,” giving the regulator better tools to tailor its actions to the seriousness of each case. Think of it as upgrading from a blunt instrument to a smarter toolkit.

Elizabeth Barrett, the FRC’s Executive Director of Enforcement, was candid in her remarks:

“Whilst in recent years there has been positive progress on increasingly timely delivery of fair, evidentially robust outcomes, the procedural options currently available to the FRC limit significant further improvement.”

She added that the E2E Review is a “major initiative” designed to push enforcement “to the next level” by making it more adaptable and responsive to the market, while still serving the public interest.

The Review also noted that 90% of applicable investigations were completed or resolved within two years, a huge jump from 53% the year prior, and far above the FRC’s own 50% KPI. On the longer-term three-year benchmark, the FRC hit 87%, comfortably exceeding its 80% target.

A Regulator with Momentum

Behind all the charts and metrics, what’s clear is this: the FRC isn’t standing still. It’s speeding up its work, sharpening its tools, and thinking carefully about how to balance enforcement with improvement.

While some cases still reflect long-standing weaknesses in audit quality, the Review makes it clear that the FRC is doing more than just ticking boxes. It’s actively redesigning its approach and inviting stakeholders to weigh in, with a public consultation on the E2E Review expected later this year.

For firms and professionals under the FRC’s jurisdiction, that means one thing: expect more speed, more nuance, and a regulator that’s increasingly confident in using a full range of responses, not just the hammer.

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