"In truth, we weren’t at the time we put this out expecting such a stern reaction as has come from industry."
- FCA chair, Ashley Alder
FCA chair, Ashley Alder, has admitted that the regulator was not "expecting such a stern reaction" from the industry on its 'name and shame' proposals.
As part of its recent consultation paper, CP24/2, Our Enforcement Guide and publicising enforcement investigations – a new approach, the FCA has proposed identifying firms at the outset of an investigation, using a 'public interest' framework, providing the firm with 24 hours’ notice that it is doing so.
However Jeremy Hunt subsequently said he hoped the regulator would “re-look” at the proposals, and a total of 16 trade associations signed a letter to the regulator saying that the plans "have an unduly negative impact on the reputation on firms".
Speaking to the Treasury Committee yesterday, Alder said that it was "valid and legitimate to go out with a consultation on this", stating that the proposals could act as a deterrent to firms and help whistleblowers to come forward, as well as avoid "the potential for speculation and rumour around cases".
Nikhil Rathi, chief executive of the FCA, was also present at the Committee hearing and set out an example of how the new rules could have helped members of the British Steel Pension Scheme.
He said: “The FCA had information about problematic financial advisers who were being investigated. The steelworker pensioners were not aware we were investigating and they were calling our contact centre and being told the firm they were asking about was on the FCA register and no further information was disclosed.
“They then took advice and potentially lost their life savings. And that was the point that the public accounts committee asked us to look into, in this context, whether there was more we could say in those circumstances.”
Alder admitted: “In truth, we weren’t at the time we put this out expecting such a stern reaction as has come from industry."
Rathi said to the Committee that it would take "several months" for the regulator to publish feedback to the consultation, with Alder stating that "no decision has been made so there is no decision to reverse”, adding that "at the moment there is no presumption to disclose or name firms".
