"We have heard the strength of feedback to our original proposals, and we are making changes as a result. "
- Therese Chambers, joint executive director of enforcement and market oversight
The FCA has published the second phase of its consultation on 'name and shame' proposals that would allow it to identify firms at the outset of an investigation.
Under the current process, investigations are only announced in very limited circumstances.
The regulator says it has set out plans for further engagement after "significant concerns were raised in relation to the original consultation".
The proposals were initially met with widespread criticism. Then-chancellor Jeremy Hunt 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".
FCA chair, Ashley Alder, later admitted that the regulator was not "expecting such a stern reaction" from the industry on its 'name and shame' proposals.
The FCA previously planned to give firms 24 hours’ notice when it announced the plans in February. However, the relaxed proposals would give firms a 10 day grace window to address flagged activity before it's announced that they’re under investigation.
The further consultation also aims to assist ongoing parliamentary scrutiny, including by the Commons’ Treasury and Lords’ Financial Services Regulation Committees.
Four significant changes have been made to the FCA’s proposals in response to feedback:
• The potential negative impact on a firm would be explicitly considered as part of a public interest test – previously it was not included as one of the factors.
• Firms would be given 10 days’ notice ahead of any announcement being made, rather than the one day originally consulted on. During this period, firms could make representations. If the FCA decides to announce, firms would then have an additional 48 hours’ notice before it is published.
• The potential for an announcement to seriously disrupt public confidence in the financial system or the market has also been included as a new factor in the public interest test.
• The FCA has clarified it would not announce investigations which began before any changes to the policy come into effect, although it may reactively confirm investigations which are already in the public domain, where this is in the public interest.
The FCA says that if the proposals were to come into effect, they would only lead to announcements of investigations into regulated firms in a "very small number of cases". The FCA Board aims to make a final decision on the proposals in the first quarter of 2025.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “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.
"We want to hear further views on whether some increased transparency could work in practice.”
Therese Chambers, joint executive director of enforcement and market oversight, added: “We have heard the strength of feedback to our original proposals, and we are making changes as a result. We hope the greater detail published today supports the further engagement we hope to have on the proposals, before we make any final decisions.”
