Is FCA Expert Evidence truly independent? Upper Tribunal judgment thinks not.

The decision of the Upper Tribunal in the case of Dunne may prove to be one of the most significant recent setbacks for the Financial Conduct Authority in the field of enforcement litigation.

In January 2026, the Upper Tribunal ruled that it would be “unfair” to admit certain FCA witness evidence as expert evidence because the witness was conflicted. Although the Tribunal later admitted parts of the material as factual evidence, the ruling nevertheless strikes at a central pillar of many FCA enforcement cases: reliance upon specialist expert opinion to establish regulatory breaches.

The Dunne/Fenech litigation arose from pension transfer advice provided between 2015 and 2017. The FCA alleged that the applicants had operated a flawed “transfer in isolation” advice model and issued substantial financial penalties and prohibition orders.

However, the Tribunal’s handling of the FCA’s evidence has wider implications far beyond pension transfer advice. The core issue was whether the FCA’s witness could properly be treated as an independent expert. The Tribunal concluded that the witness was conflicted and that admitting the evidence as expert opinion would be unfair.

That finding matters enormously because FCA enforcement cases frequently depend on retrospective expert analysis. In many investigations, particularly those involving suitability of advice, systems and controls, market conduct, or financial crime compliance, the FCA relies upon skilled persons, consultants, or specialist reviewers to provide opinions that regulated firms breached FCA principles or rules. Those opinions often become the backbone of enforcement action.

The Upper Tribunal’s criticism exposes a fundamental tension in FCA enforcement. An expert is supposed to assist the court or tribunal independently. Yet many FCA experts are closely connected to the regulatory process itself. They may have worked with the FCA previously, participated in supervisory reviews, or adopted the FCA’s own interpretation of regulatory standards before litigation even begins.

The Tribunal’s decision suggests that where an “expert” is too closely aligned with the regulator’s position, the evidence risks becoming advocacy disguised as expertise.

This weakens FCA enforcement in several important ways.

First, it raises the evidential threshold. The FCA can no longer assume that specialist opinion evidence will automatically be accepted simply because it comes from an experienced compliance professional or consultancy firm. Defendants will now be more likely to challenge the independence, methodology, and impartiality of FCA experts.

Second, the decision increases litigation risk for the regulator. FCA enforcement strategy has increasingly relied on settlements. Many individuals and firms settle because they believe the FCA’s expert evidence will be difficult to defeat before the Tribunal. If Tribunal scrutiny becomes more aggressive, more respondents may decide to contest cases rather than settle early.

Third, the ruling may undermine the FCA’s use of extrapolation. In the Dunne case, the FCA had sought to extrapolate conclusions from a limited file review across the adviser’s wider client base. Yet the Tribunal ultimately rejected the FCA’s position that all advice provided by Ms Dunne was unsuitable. Instead, after reviewing the evidence itself, the Tribunal found that suitable advice had been given in a significant proportion of cases.

That is highly significant. The FCA frequently uses sample-based reviews to justify broad enforcement conclusions. If tribunals become less willing to accept extrapolated expert opinion, the FCA may need to undertake far more detailed evidential analysis in future cases.

The case also raises wider questions about procedural fairness in FCA investigations.

The FCA possesses enormous institutional advantages. It investigates, compels disclosure, appoints reviewers, interprets regulatory standards, and then prosecutes the case. Where the same ecosystem of regulatory consultants and compliance professionals repeatedly appears in FCA investigations, concerns naturally arise regarding independence and objectivity.

The Upper Tribunal’s intervention can therefore be seen as an attempt to restore balance between regulator and respondent.

Perhaps the most troubling question arising from the decision is this: how many individuals have already been sanctioned based on similar FCA expert evidence?

That question deserves serious public scrutiny.

Over the past decade, the FCA has imposed countless prohibition orders, fines, censures, and regulatory findings that relied heavily upon expert assessments of suitability, competence, systems, or market practice. Yet very few respondents possess the financial resources necessary to challenge the FCA fully before the Upper Tribunal.

Most cases settle. That means many enforcement outcomes may never have been tested by rigorous judicial scrutiny. The Dunne ruling demonstrates that at least some supposedly independent expert evidence may not withstand examination.

This does not mean the FCA’s enforcement objectives are wrong. Consumer protection and market integrity remain vital. Nor does the Tribunal’s decision exonerate Ms Dunne or Mr Fenech entirely; the Tribunal still upheld findings of dishonesty and compliance failings in part.

The case nevertheless exposes a structural weakness in the FCA’s enforcement machinery. If expert evidence can be excluded because the witness lacks sufficient independence, confidence in past enforcement outcomes may inevitably be questioned. Firms and individuals who previously accepted FCA findings without challenge may now wonder whether the evidence against them would have survived proper judicial testing.

The broader consequence may be a shift in the balance of power between the FCA and regulated persons. For years, the regulator has benefited from the perception that its technical expertise is virtually unassailable. The Upper Tribunal has now signalled that FCA expertise is not beyond challenge.

That is likely to embolden future respondents.

More contested hearings may follow. More applications to exclude evidence may be made. More scrutiny will be directed at the relationship between the FCA and its chosen experts. Ultimately, the Dunne case may mark the beginning of a more cautious judicial approach to FCA enforcement evidence, one that insists regulatory opinion must be genuinely independent before it can justify life-changing sanctions against regulated professionals.