On 29 January 2025, the UK’s Financial Conduct Authority (FCA) issued a landmark fine against trading platform Infinox Capital, marking its first enforcement action under the Markets in Financial Instruments Regulation (MiFIR) since the regulation came into effect in 2018. The £99,200 fine highlights key challenges facing firms in meeting complex regulatory obligations and signals a potential shift in enforcement intensity. For smaller firms, this should serve as a serious warning to review and strengthen their compliance practices now—before they find themselves in a similar situation.
In this article, we will explore the implications of the FCA’s fine, why it has taken seven years for such enforcement action, and what small firms need to understand and implement to stay ahead of compliance risks.
A Warning Shot for the Industry: Why This Fine Is Significant
The fine imposed on Infinox Capital may appear relatively modest when compared to penalties levied against larger institutions. However, for small and mid-sized firms, £99,200 is significant, particularly when coupled with the operational burden of back-reporting more than 46,000 missing transaction reports. The FCA’s enforcement serves multiple purposes:
- Deterrence: The financial penalty sends a clear message that failure to meet transaction reporting requirements will not be tolerated, regardless of firm size.
- Operational Strain: The requirement for Infinox to back-report the missing transactions underscores how time-consuming and costly remediation efforts can be.
- Self-Reporting and Accountability: Perhaps most crucially, the FCA emphasised that Infinox’s failure to self-report the issue was a key factor in the decision to take enforcement action. The firm’s lack of proactive engagement with the regulator likely escalated the severity of the response.
For small firms, the takeaway is clear: ignoring or delaying corrective action after identifying regulatory failures is a dangerous and costly mistake. Early intervention, including self-reporting issues to the FCA, could have significantly mitigated the outcome in this case.
Why Has It Taken the FCA Seven Years to Issue Its First Fine?
MiFIR, introduced in January 2018, was not entirely new but rather an extension of pre-existing transaction reporting requirements. The regulation added additional data fields, increasing the complexity of reporting obligations. So, why did it take the FCA so long to issue its first fine under MiFIR?
The answer lies partly in the regulator’s initial approach. In the early years of MiFIR, the FCA focused on collaboration, guidance, and education rather than enforcement. It engaged with firms informally to address data quality issues, issuing warnings and requiring corrective actions without resorting to fines. Larger firms were particularly scrutinised during this period, with the FCA conducting Section 166 skilled person reviews and other supervisory measures.
Smaller firms, however, often lack the same level of interaction with the FCA, leaving them more vulnerable to falling behind on regulatory updates. Limited resources, inadequate training, and over-reliance on internal compliance staff further contribute to the challenges small firms face. The Infinox case suggests that the FCA is now shifting toward a more assertive stance, especially with firms that fail to engage proactively or show persistent compliance gaps.
Why Small Firms Are More Vulnerable
Larger institutions typically maintain well-resourced compliance departments and have built long-standing relationships with the FCA. Their frequent engagements with the regulator mean they are more familiar with expectations and better positioned to address issues quickly. In contrast, smaller firms often:
- Have fewer compliance officers, with limited capacity to manage complex regulatory obligations.
- Lack proactive relationships with the FCA, leading to gaps in understanding new regulatory requirements.
- Underestimate the importance of self-reporting issues, which can exacerbate regulatory penalties.
In Infinox’s case, the failure to self-report missing transaction reports through a standard errors and omissions (E&O) notification likely played a decisive role in the FCA’s decision to impose a fine. The message here is that honest, proactive communication with the regulator can often result in reduced enforcement actions or even avoid fines altogether.
Looking Ahead: Preparing for Increased FCA Scrutiny
The FCA’s first MiFIR-related fine serves as a wake-up call for small firms navigating the complex regulatory environment. While the focus has historically been on larger institutions, smaller firms can no longer assume they will remain under the radar. As the regulatory landscape evolves, firms that take a proactive approach to compliance, training, and self-reporting will be in a far better position to withstand scrutiny.
The stakes are high, and the cost of non-compliance goes beyond financial penalties. Firms that fail to act risk not only fines but also reputational damage, operational disruption, and strained relationships with regulators. For those willing to act now, however, there is an opportunity to turn compliance into a competitive advantage, ensuring sustainable growth in an increasingly regulated world.
The time to act is now—before the next wave of enforcement actions strikes. Contact us at Leaman Crellin to discuss how we can help you to prepare.
