FCA Prohibition Orders Explained: What They Are and What They Mean for Senior Managers
A prohibition order is one of the most serious steps the FCA can take against an individual. It bars a person from performing some or all functions in relation to regulated financial services, often permanently, and it’s published on the FCA’s register for anyone to see. For Senior Managers, it’s the outcome that ends a career in financial services. This guide explains what prohibition orders are, when the FCA uses them, how the process works, and what firms need to check when they recruit.
What Is a Prohibition Order?
Under section 56 of the Financial Services and Markets Act 2000, the FCA can make an order prohibiting an individual from performing a specified function, any function within a specified description, or any function at all, in relation to regulated activities. The PRA has a similar power for the firms it regulates.
The FCA can make a prohibition order if it appears that the individual is not a fit and proper person to perform those functions. Orders can be:
| Type | Effect |
|---|---|
| Full prohibition | Bars the individual from performing any function in relation to any regulated activity |
| Partial prohibition | Bars them from specific functions, such as Senior Manager Functions or particular activities, while allowing other work |
Orders are published on the FCA Register, usually alongside a Final Notice explaining the reasons.
When Does the FCA Use Prohibition Orders?
The FCA’s approach is set out in its Enforcement Guide. Prohibition orders typically follow conduct showing that an individual lacks honesty, integrity or competence, including:
- dishonesty, such as misleading customers, the firm or the regulator
- serious financial crime, including fraud and money laundering
- criminal convictions relevant to financial services
- serious or repeated failures of competence that put customers at risk
- a lack of integrity shown by serious non-financial misconduct
- failure to be open and cooperative with the regulator
Prohibition is about protecting consumers and markets in future, not punishment. That’s why it can be made alongside, or separately from, a financial penalty or public censure.
How the Process Works
| Stage | What happens |
|---|---|
| Investigation | The FCA investigates the individual’s conduct and gives them an opportunity to respond |
| Warning notice | The FCA sets out the action it proposes to take and why |
| Representations | The individual can make representations before a decision is taken |
| Decision notice | The FCA confirms its decision |
| Upper Tribunal | The individual can refer the decision to the independent Upper Tribunal |
| Final notice | Once the process ends, the FCA publishes its final notice and the order takes effect |
Many cases end in settlement, where the individual agrees not to contest the FCA’s findings. Cases referred to the Upper Tribunal can take much longer.
What It Means for the Individual
- Career impact: a full prohibition ends a career in regulated financial services. A partial prohibition can limit someone to roles below Senior Manager level, or outside particular activities.
- Public record: the order and the reasons are public and permanent on the FCA Register.
- Criminal liability: performing a prohibited function is a criminal offence.
- Revocation: an individual can apply for an order to be varied or revoked, usually only after a substantial period and with strong evidence of change. Revocations are rare.
What It Means for Firms
Firms must take reasonable care not to allow a prohibited person to perform a function they’re prohibited from. In practice, that means checking the FCA Register before appointing anyone to a regulated role, and including prohibition checks in pre-employment screening, regulatory references and annual fitness and propriety assessments. Our pre-offer checks and fit and proper assessment template include them.
Prohibition and the Senior Managers Regime
The Senior Managers regime makes personal accountability more visible, and the FCA has used prohibition against Senior Managers who failed in their responsibilities, as well as against individuals for misconduct. Senior Managers can reduce their exposure by:
- understanding exactly what they’re accountable for, through a clear Statement of Responsibilities
- keeping records of the reasonable steps they take
- escalating concerns and recording challenge
- being open and cooperative with the regulator at all times
- following the Conduct Rules, including the rules on integrity and openness
Our analysis of FCA enforcement trends looks at how recent cases have treated Senior Managers.
Prohibition Alongside Other Sanctions
The FCA often combines a prohibition order with other action, such as a financial penalty or public censure, particularly where the individual benefited from their misconduct. Separately, a firm’s own disciplinary action, Conduct Rules breach reporting and regulatory references may already have recorded the conduct, long before any FCA decision.
Non-Financial Misconduct
The FCA has made clear that serious non-financial misconduct, such as harassment, bullying and violence, can show a lack of integrity and fitness. It has used prohibition orders in cases involving serious misconduct outside individuals’ core financial services work. Firms should treat these matters seriously in their fitness and propriety assessments and regulatory references.
A firm shortlists a candidate for a compliance officer role. During pre-offer checks, the recruiter searches the FCA Register and finds that the candidate was previously subject to a partial prohibition order that has since been revoked. The candidate had disclosed it at the first interview, explained the circumstances and provided the revocation decision. The firm considers the matter carefully, takes legal advice, and decides to proceed with full disclosure in the approval application.
Prohibition Orders and Recruitment
For firms, a prohibited individual appearing on a shortlist is a serious failure of due diligence. For candidates with a past regulatory matter that didn’t result in prohibition, openness is essential: a past issue rarely rules someone out on its own, but non-disclosure often does. We check every candidate against the FCA Register and the fit and proper criteria before introduction, and ask directly about any past regulatory matters. Our guide to regulatory references explains what previous employers must disclose.
Checking the FCA Register
The FCA Register is free to search. For individuals, it shows current and past approvals and any prohibition orders. Firms should search it for every candidate for a regulated role, and keep a record of the search, with the date, as part of their recruitment file. It’s also worth searching for previous names, and checking the PRA’s enforcement notices for candidates who’ve worked at banks, building societies or insurers.
Fitness, Propriety and Recruitment
Checks and services that protect firms and candidates. Every SMF search is led personally by Adrian Lawrence FCA
Accountability
Reducing personal exposure.
→ FCA enforcement trends
→ Conduct Rules training guide
Recruitment
Senior Managers checked before introduction.
→ SMF recruitment services
→ Compliance officer (SMF16)
Every SMF search is led personally by Adrian Lawrence FCA
Frequently Asked Questions
What is a prohibition order?
An order under section 56 of FSMA barring an individual from performing some or all functions in relation to regulated activities, because they’re not fit and proper.
How long does a prohibition order last?
Usually indefinitely. The individual can apply to have it varied or revoked, but this is rare and normally only after a substantial period.
Is a prohibition order public?
Yes. It’s shown on the FCA Register, usually with a Final Notice explaining the reasons.
Can someone challenge a prohibition order?
Yes. They can make representations to the FCA and refer its decision to the Upper Tribunal.
Is it an offence to work in breach of a prohibition order?
Yes. Performing a prohibited function is a criminal offence, and firms must take reasonable care not to allow it.
About the Author
Adrian Lawrence FCA is the founder of SMF Capital. He is a Chartered Accountant and Fellow of the ICAEW, holds a practising certificate in his own name, and is a former listed-company Finance Director with a BSc from Queen Mary College, University of London. He founded FD Capital in 2018 and has since built a network of five specialist recruitment practices. He leads every SMF Capital search personally, checking every candidate against the FCA Register and the fit and proper criteria before introduction. View Adrian’s ICAEW profile.
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