Wendy Saunders’s articles from Lewis Silkin are most popular:

Lewis Silkin are most popular:


within Cannabis & Hemp topic(s)

The Independent Football Regulator (“IFR”) is brand
new. With it come lots of unknowns. To get a good understanding,
and indeed level of comfort, about what the new regulatory regime
under the Football Governance Act 2025 (“FGA 2025”)
might mean for football clubs in practice, it is helpful to
consider the regulatory models that inspired its design – the
key one being that of the Financial Conduct Authority
(“FCA”). By doing this, we can anticipate how the IFR
is likely to apply the new regime and flex its new powers.

Why the FCA?

The FCA’s statutory objectives include protecting
consumers and the integrity of the UK financial system, promoting
competition in the interests of consumers and ensuring relevant
markets function well. Essentially, the FCA plays a key role in
ensuring that the financial system works well for the UK
public.

While financial institutions and football clubs are vastly
different beasts, the level of their importance to the country is
not dissimilar. The Fan-Led Review of Football
Governance recognised the place of football clubs in
British people’s lives and society – acknowledging the
cultural significance of clubs and their role in maintaining
community cohesion. It also recognised the potential for clubs to
contribute positively to the economy, but also the perilous
financial position of many of them. It is therefore not surprising
that the law-makers turned to the FCA for inspiration on how to
create a protective regime, which could also allow well run clubs
to thrive economically.

Establishing the appropriate regulatory model for football
clubs

The Fan-Led Review of Football
Governance considered several regulatory models and
concluded that regulation needed to be led by an independent
regulator created by an Act of Parliament. Further, it noted the
regulator should be independent from football clubs and government
and have a clear statutory objective with strong investigatory and
enforcement powers. The Review panel acknowledged the contribution
of many experts who were willing to assist with its work,
particularly the supervision team at the FCA.

In terms of financial regulation for clubs the Review proposed a
simple system based on capital and liquidity requirements used
alongside a financial resilience supervision model operated by the
FCA. Firstly, clubs would be obliged to ensure they had enough cash
coming into the business, control of costs and suitable processes
and systems to ensure the sustainability of the business. Clubs
would need buffers in place for shocks and unforeseen
circumstances. The regulator would look at clubs’ plans,
conduct its own analysis and if a club plan was not credible, the
club did not have enough liquidity, costs were too high or risk not
accounted for properly, the regulator would be able to demand an
improvement in finances (e.g. inject some cash into the business or
lower the wage bill). Essentially, a club would be able to invest
to seek to improve its competitive position but would no longer be
able to gamble with a club’s future. For a club to do this,
the money would need to be in the club upfront and committed.

The government’s 2023 policy paper on reforming club
football governance also made significant reference to the FCA. It
referred to the fit and proper persons tests applied by other
regulators, including that of the FCA. It suggested that the
regulator’s approach to owners and directors that are
politically exposed persons (PEPs) should mirror that of the FCA.
It also took inspiration for its proposed regulatory principles
from the FCA’s Principles of good regulation, which are
designed to ensure the regulator exercises its functions
appropriately. Ten regulatory principles were proposed, of which we
highlight the following five as being of particular interest:


Participative. The regulator should aim to
deliver its statutory duties without formal intervention, but
instead through advocacy. This means engaging constructively with
clubs and steering them to compliance, wherever possible.

Bold enforcement. When advocacy is ineffective,
or in critical situations, intervention and enforcement should be
bold.

Senior management responsibility. Responsibility
for the activities of football clubs and compliance with regulatory
requirements rests collectively with the board of directors. Clubs
would be required to make it clear which individuals hold board
and/or senior management responsibilities, including the owner
where relevant. The regulator should hold these individuals, and
the board as a whole, to account as appropriate.

Adaptive and context specific. The regulator
should be flexible in its approach to regulating different clubs.
This means, where appropriate, it should exercise its functions
(e.g. set Specific Licence Conditions) in a way that recognises
differences in the context (nature, circumstances, and objectives)
of different clubs.

Proportionality. The regulator should ensure that
any burden or restriction that it imposes on a person, club or
activity is proportionate to the benefits expected as a
result.

The policy paper went on to note that the regulator would be
expected to publish detailed guidance on its regulatory system,
including its rules and enforcement policy – giving the
FCA’s handbook as an example. In relation to the
regulator’s power to impose directions on clubs to take
certain action – to address particularly urgent and significant
problems, or if softer forms of advocacy had failed to address
non-compliance – the policy paper referred to the FCA’s
VREQ (voluntary requirement) and OIREQ (own initiative requirement)
powers to vary permission, impose requirements, or change
individuals’ approvals in response to suspected serious
misconduct and where harm needs to be prevented urgently.

Similarities between the IFR and FCA regulatory regimes

The regime ultimately implemented under the FGA 2025 and the IFR
guidance is very heavily influenced by key aspects of the FCA
regulatory regime.

Most of the proposed regulatory principles were enacted in
section 8 of the FGA 2025. There are close parallels between the
criteria for being an owner of a regulated club and the criteria
for being a controller of a financial services firm under the
FCA’s controllers regime. The terminology used for senior
managers – of performing senior management functions –
mirrors that used by the FCA. The three-limb test for suitability
to perform an IFR senior management function closely reflects the
FCA’s fit and proper test, with the IFR guidance on honesty
and integrity covering to a significant degree items in common with
FCA guidance. The IFR application forms for becoming a senior
manager or owner contain distinctly similar questions to those
contained in the FCA’s application forms for becoming a
senior manager or controller.

Memorandum of understanding between the IFR and FCA, and
co-operation going forward

The IFR recently entered into a memorandum of understanding (MoU) with
the FCA that establishes a framework for cooperation, coordination
and information sharing. It is clear that as the IFR establishes
and develops its new regulatory regime it will continue to be
supported by the FCA – which runs a well-developed and highly
regarded regulatory regime. This should help the IFR to deliver an
effective and proportionate regime, and provide an element of
predictability about how it will operate.

Conclusion

The aim of this new regulatory regime is to achieve certain
desired outcomes, not necessarily mandating how those should be
achieved, and only intervening with enforcement action when
absolutely necessary – the potential for the IFR to exercise
robust enforcement powers generally being sufficient to encourage
compliance.

It is unsurprising and perhaps reassuring that the first CEO of
the IFR was responsible for creating the FCA’s senior
managers regime. That FCA regime was implemented in response to the
financial services sector’s own troubles concerning
accountability following the financial crisis in 2008 and the
report of the Parliamentary Commission on Banking Standards in
2013. With suitably experienced leadership, including its wider
board, and support from the FCA, the IFR should be well equipped to
steer English football as a whole, and the clubs it regulates,
towards sustainability and financial resilience. But football is a
unique world, so we must wait and see how compatible a regime
designed for bankers is with the competitive (and often
adversarial) nature of the beautiful game. If you’re subject
to the regime, our top tip would however be to respect the spirit
of the principles for good regulation that the IFR is committed to
and also engage constructively. That should avoid an own goal.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.