Expert Evidence in Financial Services Enforcement

 

Why cases are increasingly shaped before they are ever heard

In financial services enforcement and contested supervisory action, the landscape is shifting. Increasingly, outcomes are being shaped not by disputed facts alone, but by the framing, methodology and influence of expert evidence at a much earlier stage than many firms and advisers expect.

This means cases are now often shaped long before formal proceedings begin.

From technical support to case architecture

In the past, expert evidence in regulatory proceedings was typically confined to discrete technical questions: market practice, systems behaviour, valuation methodology or accounting treatment. But that role has expanded such that today expert evidence is increasingly used to:

• Explain how markets or systems should have behaved
• Translate complex operational or trading behaviour into standard market practice
• Support conclusions about foreseeability, recklessness or intent
• Bridge evidential gaps where direct proof is limited

As a result expert opinion now often forms part of the structure of the regulatory case, rather than a supporting component.

Methodology is now the central vulnerability

In contested cases (as we have found out first hand), challenges to expert evidence are rarely about qualifications. They are about method.

Common areas of debate include:

• Assumptions that embed hindsight bias
• Selective or incomplete datasets
• Methodologies that collapse judgement into inevitability
• Failure to distinguish abnormality from misconduct
• Blurring explanation with evaluation

Where an expert framework appears outcome driven, tribunals and courts have shown an increasing willingness to limit or discount the evidence altogether.

Inference, causation and expert overreach

Expert evidence is now frequently relied upon to support inferences that would otherwise be difficult to establish directly.

This is especially common where:

• Intent or recklessness is inferred from technical or statistical patterns
• Operational failure is equated with governance failure
• Market impact is treated as evidence of misconduct rather than as a consequence

The risk is not the use of expert evidence itself, but the subtle shift from explanation to conclusion. Courts have increasingly signalled discomfort where expert opinion effectively answers the ultimate question for the tribunal.

Timing matters more than rebuttal

One of the most significant developments is when expert evidence now exerts its influence.

In many cases:

• The regulator’s expert framework shapes the investigation from an early stage
• Decisions on scope, document requests and theory of harm follow that framework
• By the time proceedings are issued, the narrative is already expert led

And as such, firms that engage experts only at the rebuttal stage often find themselves constrained by assumptions that have already hardened into the case theory.

A necessary qualification

This does not mean that expert evidence determines outcomes. Courts still remain willing to set aside expert opinion where methodology overreaches or strays into advocacy. But its influence is felt earlier in shaping investigations, theories of harm and litigation positioning.

Beyond enforcement: supervisory reliance on expert analysis

Expert influence is no longer confined to formal enforcement proceedings. It increasingly informs:

• Skilled person reviews
• Supervisory remediation demands
• Post-incident reviews
• Systems and controls assessments

As a result, expert analysis can shape outcomes even where no enforcement action ultimately follows. This trend is visible in how supervisory authorities such as the FCA and the PRA increasingly rely on external technical assessments to support supervisory conclusions.

For firms, this blurs the boundary between supervision and enforcement in a way that materially affects legal risk.

Practical implications for practitioners

For lawyers, barristers and experts involved in financial services disputes, the implications are clear that an effective strategy increasingly requires:

• Early identification of where expert judgement will be decisive
• Testing regulatory expert assumptions before they crystallise
• Careful control of internal analyses that may later be repurposed
• Treating expert evidence as a case shaping tool, not a defensive add-on

From a litigation perspective, many cases are now determined less by whose factual account is more detailed and more by whose expert framework the court ultimately accepts.

Expert witness services at OFC

Recognising the evolving role of expert evidence, OFC offers a specialist expert witness capability designed to support legal teams at every stage of a dispute:

• Expert instruction strategy – advising on when and how to instruct experts to influence case framing, not just rebut evidence
• Methodology review and critique – assessing regulatory expert approaches to identify assumptions, bias risks and methodological weaknesses
• Preparation of expert reports – drafting clear, robust and defensible expert evidence that stands up to scrutiny in regulatory, civil or criminal litigation
• Court and tribunal support – including assistance with expert conferencing, hot-tubbing and oral evidence preparation
• Cross-disciplinary synthesis – integrating legal, economic, statistical and operational perspectives where complex evidence spans multiple domains

Our service emphasises not only technical rigour but also strategic impact, ensuring that expert evidence withstands challenge at every stage.

Closing observation

The growing centrality of expert evidence reflects the complexity of modern financial services. But it also increases risk.

Where expert opinion fills gaps that evidence alone cannot, the boundary between explanation and advocacy becomes critical. Practitioners who recognise that boundary early are far better placed to shape outcomes than those who treat expert evidence as a late-stage necessity.

Please Contact us at info@objectivus.com if you would like to arrange a practical discussion.