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Less than 24 hours after the government announced plans to abolish the Payment Systems Regulator (PSR), the Financial Conduct Authority (FCA) has withdrawn plans to name and shame companies under investigation, as well as new diversity and inclusion plans.
The regulator has scrapped a controversial proposal to shift its enforcement transparency test from "exceptional circumstances" to a broader "public interest" standard after facing heavy opposition from the financial services sector.
In a letter to the Treasury Select Committee, FCA chief executive Nikhil Rathi confirmed that the regulator will not move forward with the change due to a lack of consensus.
Instead, the FCA will continue to apply the existing test for determining when it announces investigations into regulated firms.
Despite abandoning the proposal, the FCA will proceed with other transparency measures that received broad support.
These include:
- Confirming investigations that are already in the public domain.
- Publicising potentially unlawful activities of unregulated firms or regulated firms operating outside their permitted scope.
- Publishing anonymised details of issues under investigation, possibly through a regular bulletin.
The FCA expects to publish its final policy by the end of June 2025.
'We are speeding up our enforcement work. On our enforcement transparency proposals, we have always aimed to build a broad consensus,” said Rathi.
He continued that “considerable concerns remain about our proposal to change the way we publicise investigations into regulated firms, so we will stick to publicising in exceptional circumstances as we do today”.
“We will implement changes which have commanded wider support and which we believe will help support our efforts to protect consumers from harm.”
D&I plans also dropped
The FCA and the Prudential Regulation Authority (PRA) have also decided not to proceed with new diversity and inclusion (D&I) rules for regulated firms.
After consulting in 2023, the regulators concluded that introducing additional requirements would create unnecessary burdens, given the existing legislative agenda on employment rights and pay gap reporting.
Instead, the FCA said it will continue to support voluntary industry initiatives, relying on soft law rather than harder enforcement.
Trade associations such as UK Finance have so far been big supporters of diversifying the financial services sector.
Meanwhile, the FCA has reaffirmed its commitment to tackling non-financial misconduct, such as workplace harassment, which it sees as a vital factor in maintaining strong governance and market integrity.
However, the regulator is taking more time to refine its approach in alignment with upcoming legislation, with next steps also expected by the end of June.
