The FCA has fined two former finance directors for their involvement in misleading statements being issued by Carillion plc.

The FCA says the two directors were aware of serious financial troubles in Carillion's UK construction business but failed to reflect this in company announcements or alert the Board and audit committee, which led to poor oversight.

They have been fined £232,800 and £138,900 respectively. The fines were imposed after they withdrew their challenges to the FCA's decision.

As finance directors, they had responsibility for Carillion's procedures, systems and controls relating to financial reporting. These were not sufficient to ensure that contract accounting judgments made in its UK construction business were made, recorded and reported appropriately.

The FCA found that both directors acted recklessly and were knowingly concerned in breaches by Carillion of the Market Abuse Regulation (MAR) and the Listing Rules:

• Article 15 of MAR (prohibition of market manipulation) by disseminating information that gave false or misleading signals as to the value of its shares in circumstances where it ought to have known that the information was false or misleading;
  • Listing Rule 1.3.3R (misleading information must not be published) by failing to take reasonable care to ensure that its announcements were not misleading, false or deceptive and did not omit anything likely to affect the import of the information;
  • Listing Principle 1 (procedures, systems and controls) by failing to take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations under the Listing Rules; and
  • Premium Listing Principle 2 (acting with integrity) by failing to act with integrity towards its holders and potential holders of its premium listed shares.

Carillion's former chief executive officer received a Decision Notice about related findings, many of which he disputes. He has made a statutory reference to the Upper Tribunal and the hearing of his reference is scheduled to start on 16 February 2026.

Key takeaways

This case serves as a timely reminder that, in particular for listed companies, accounting judgements need to be justifiable, there needs to be appropriate reporting to Board and Audit Committees – including of financial risks and exposures, and market announcements must not be misleading.  To achieve this requires sufficiently robust procedures, systems and controls.  This will need to include, amongst other matters, awareness of policies across all business areas, and documentation of judgements that are subject to appropriate review and approval.  The FCA considers that procedures, systems and controls must provide "clear, consistent and transparent reporting throughout the company".

It is, of course, disappointing to see this matter, said to have had a serious impact on the orderliness of or confidence in the market, take so many years to be resolved – over eight years and counting.

Whilst the company and directors in question are said not to have incurred any personal gain or loss as a result of the breaches described in the notices, it is said that the breaches – which were reckless — resulted in shares in the company being overpriced for a significant period of time with significant loss or risk of loss to individual consumers, investors, or other market users.  This, taken together with the serious nature of the procedures, systems and controls failings, led to the seriousness of the breach for the purposes of the fine being assessed at level 4 (out of 5).

Whilst this was accepted by two out of the three directors concerned, the third director referred his decision notice to the Upper Tribunal.  This presents a risk of divergent outcomes.  However, the reference may facilitate greater clarity on the interpretation of the 'knowingly concerned' test and the level of knowledge that is required.