.svg)
The UK’s Financial Conduct Authority (FCA) has responded to criticism of its name-and-shame enforcement proposals, which were consulted on earlier this year, suggesting amendments in its latest call for feedback.
The revised proposals aim to address feedback from stakeholders and support ongoing parliamentary scrutiny, including from the Treasury Committee and the Lords’ Financial Services Regulation Committee.
The FCA also released new data showing a quicker pace of investigations, with some being completed in as little as 16 months.
As part of the updated consultation, the regulator has provided additional data, case studies and a clearer explanation of the public interest test to guide decisions on announcing investigations.
These measures are intended to offer stakeholders greater clarity and confidence if the changes are implemented.
“We have heard the strength of feedback to our original proposals, and we are making changes as a result,” said Therese Chambers, joint executive director of enforcement and market oversight at the FCA.
“We hope the greater detail published today supports the further engagement we hope to have on the proposals, before we make any final decisions.
Key revisions
In launching its latest consultation, the FCA says that it has “listened carefully” to the feedback to its original proposals.
“Firms and industry groups felt strongly that our existing ‘exceptional circumstances’ policy was sufficiently broad to allow us to announce in more cases,” the consultation document says.
It goes on to say that firms also wanted greater detail about the proposed public interest test and challenged the regulator on how much notice it would give before any announcement.
“We have re-drafted those proposals to try and address the concerns raised and give more clarity on how they would work in practice. We are also providing more data and case studies explaining how we could make announcement decisions.”
The FCA has made four “significant” amendments:
- Public interest test: The potential negative impact on a firm will now be explicitly considered as a factor in the public interest test, which was absent from the original proposal.
- Advance notice: Firms will receive ten days’ notice before any announcement is made, with an opportunity to make representations. If the FCA proceeds with the announcement, firms will get an additional 48 hours’ notice before publication.
- Market confidence: A new factor in the public interest test considers whether an announcement could seriously disrupt public confidence in the financial system or markets.
- Scope of application: Investigations initiated before the policy changes take effect will not be proactively announced, although the FCA may confirm existing investigations in the public domain when deemed in the public interest.
In its consultation document, the FCA says that consumer groups, whistleblower advocates and transparency campaigners were among those that favoured greater transparency about investigations, as did some of the regulator’s enforcement partners.
It points out that “firms benefit from having the badge of FCA authorisation, and their consumers and investors should be able to rely on it as reassurance that a firm will treat them fairly”.
“Where that firm is placed under investigation, it may not always serve consumers’ interests for us to withhold that information from them.”
Stakeholders are advised to respond to the FCA proposals by February 17, 2025, 12 months on from the first proposal being released.
“We have made good progress in increasing the focus and pace of our enforcement work — so that we can prioritise the investigations most likely to drive meaningful deterrence across industry and deliver more timely outcomes,” said Steve Smart, joint executive director of enforcement and market oversight at the FCA.
“We want to hear further views on whether some increased transparency could work in practice.”
