The UK Financial Conduct Authority (FCA) has issued a warning to football clubs about questionable sponsorship deals with unauthorized firms including crypto businesses and trading platforms. These unauthorized firms may be breaching UK financial services laws by providing financial services in the UK without authorization. The FCA expects every UK football club to conduct proper due diligence on financial services sponsors before signing agreements and on an ongoing basis.
The FCA has warned that entering into relationships with unauthorized firms will expose a club to potential legal liability, money laundering risks and serious reputational damage, and mentioned it will take necessary action where it identifies concerns. The FCA is engaging with the Government, the Premier League and the Independent Football Regulator to address this issue across the sport.
What Football Clubs Should Do
As a matter of urgency, clubs should:
- Review any existing relationships and assess whether the sponsorship firm is authorized to offer its services in the UK. The firm may be in the process of obtaining permission from the FCA or may need to change how it promotes its services. The club should evaluate any potential exposure and determine whether the relationship can continue. The club will also need to assess the risks associated with the sponsorship deal, including legal, financial crime, reputational and financial risks, as well as potential consumer harm.
- Review their due diligence procedures to ensure that they are robust and aligned with regulatory and legal expectations. It is likely that the FCA will require firms to produce such procedures given that they are conducting a review across the sport.
How Kroll Can Help
Kroll brings together a team of experts who conduct comprehensive due diligence, assess relationship risk exposure and regularly interact and conduct reviews on behalf of the FCA. Our expertise enables us to provide practical, regulatory-aligned support tailored to your needs. We can assist by:
Assessing Sponsorship Activities
Identifying whether sponsorship partners are undertaking any unauthorized regulated activities and, where applicable, advising on appropriate options from obtaining authorization to limiting activities.
Evaluating Risk Exposure
Assessing your club’s exposure to potential financial, regulatory and reputational risks arising from sponsorship relationships and developing a clear, actionable mitigation plan.
Enhancing Due Diligence Frameworks
Reviewing your existing due diligence processes to ensure alignment with regulatory expectations and identifying any enhancements to strengthen governance and compliance.
Conducting Due Diligence
Kroll works with clubs and sporting bodies globally to conduct thorough due diligence on potential new commercial partners and investors, ensuring they are reputable, credible and suitable for engagement.
If you require any assistance with any of the items mentioned above or would like to learn more about how Kroll can support you, please reach out to your usual contact at Kroll or any of the contacts listed below.
