FCA final notice: governance failures and disclosure breaches at Carillion

On 16 February 2026, the Financial Conduct Authority (FCA) issued a Final Notice imposing a £237,700 penalty on Richard John Howson, the former Group CEO of Carillion plc, for being 'knowingly concerned' in multiple, serious breaches of UK public company and market abuse regulations. The Notice follows the collapse of Carillion in January 2018 and reflects years of intensive regulatory investigation.

Summary of the FCA’s findings

Between July 2016 and July 2017, Carillion issued three market announcements: its December 2016 trading update, March 2017 full year results, and May 2017 AGM statement, which the FCA found presented an unjustifiably positive picture of the company’s financial health.

During this period, the FCA determined that Mr Howson received a series of internal reports showing a deteriorating financial position across Carillion’s major construction projects. These reports highlighted worsening performance, substantial financial exposures, escalating risks, inconsistencies between internal assessments and external figures, and the increasing use of aggressive accounting judgements to support the appearance of profitability.

Despite receiving this information, the FCA concluded that Mr Howson did not escalate these issues to the Board or the Audit Committee, nor did he ensure that they were reflected in the company’s external announcements. Consequently, the disclosures made to the market did not accurately represent Carillion’s true financial condition.

This failure to provide accurate information culminated in Carillion’s July 2017 announcement of an £845 million provision, which triggered a 39% share price drop on the day of the announcement. In mid-January 2018 Carilion went into compulsory liquidation and by March the Financial Reporting Council had launched an investigation into the preparation and approval of the financial statements of Carillion.

Regulatory breaches identified

The FCA found that Mr Howson was knowingly concerned in Carillion's breaches of four key regulatory provisions:

1. Market Abuse Regulation (MAR) - Article 15

   Carillion disseminated information giving false or misleading signals as to the value of its shares. The FCA held that Carillion ought to have known the information was misleading, and that Mr Howson’s involvement in approving the announcements contributed to the breach.
    

2. Listing Rule 1.3.3R

   Issuers must ensure that information published to the market is not misleading, false or deceptive and does not omit anything likely to affect the import of the information. The FCA determined that Carillion’s announcements omitted crucial details about the company’s financial risks.
    

3. Listing Principle 1

   A listed company must maintain adequate procedures, systems and controls to ensure compliance with its regulatory obligations. Carillion’s internal reporting structures were found to be inconsistent, unclear and incomplete, and Mr Howson was found to have been aware of these weaknesses without taking corrective action.
    

4. Premium Listing Principle 2

   Listed companies must act with integrity towards existing and potential shareholders. The FCA found that Carillion failed to do so due to the misleading nature of its market disclosures.

Penalties and rationale

In determining the penalty, the FCA considered:

• the severity and duration of the breaches;

• their impact on market integrity and investor confidence;

• the reckless nature of the conduct; and

• Mr Howson’s cooperation with the investigation, which resulted in a 20% reduction in the penalty.

The FCA decided to fine him 30% of his income during the relevant period (just over a year) but with the 20% discount referenced above this was reduced to £237,700, which he had a year to pay. This was despite Mr Howson not directly benefiting from his conduct.

Implications for listed companies and their directors and management teams

The Final Notice has important implications for senior executives and non-executive directors (NEDs) across all public companies.

1. Market disclosures must reflect internal reality

   Executives should not approve market statements that are inconsistent with internal reports or incomplete risk information. The FCA expects a proactive effort to ensure accuracy.
    

2. Escalation duties are non negotiable

   Warning signs must be promptly raised with the Board and Audit Committee. Silence, even if others have overlapping responsibilities, can amount to misconduct.
    

3. Adequate systems, controls and documentation are essential

   Companies must ensure systems that:

   • produce consistent financial information;

   • clearly document key accounting judgements;

   • capture and escalate material risks; and

   • allow governance committees to challenge, verify and understand the business.
      

4. NEDs must demand transparency and challenge assumptions

   Boards and Audit Committees should ensure they receive granular risk reporting, understand variances between project and group level figures, and test management’s optimism against underlying data.
    

5. Culture and pressure can create reporting distortions

   The FCA underlined the role of internal performance pressure in driving overly aggressive accounting. Boards must monitor signs that targets may be influencing financial reporting behaviour.

Strengthening Governance and Disclosure Going Forward

The Carillion case highlights the need for:

• robust disclosure controls and procedures;

• regular reviews of risk reporting frameworks;

• independent oversight mechanisms, especially for high risk projects; and

• enhanced training for senior managers and NEDs on MAR, UK Listing Rules and financial reporting duties.

It also reinforces the principle that executive responsibility extends beyond technical accounting expertise. What matters is that executives act on the information available to them and ensure the market is not misled.