Are you curious about the new regime under the Football Governance Act (“FGA 2025”) – read on to find out more about how the Independent Football Regulator (IFR) will work.
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.
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