The Financial Conduct Authority (FCA) is planning to “intensify” its engagement with the City in the coming months over controversial plans to ‘name and shame’ firms under investigation.
Therese Chambers, the regulator’s joint executive director of enforcement and market oversight, said in a speech on Tuesday that the FCA had been “reflecting on the range of serious concerns raised and working to build understanding” based on 130 responses to its consultation in April.
“While consumers groups, whistleblowers and some other regulators welcomed the prospect of greater transparency, the companies we regulate were overwhelmingly against,” she added.
“We do think the case for a degree more transparency remains strong. But it needs to be seen within the vital context of a focused number of cases likely to deliver the greatest deterrent, and delivered much faster.”
Under proposals being considered, the FCA would publicly name companies facing an enforcement investigation on a more regular basis and at an earlier stage. It already has the power to name firms under “exceptional circumstances” in the public interest.
The plans have sparked backlash from top trade bodies like UK Finance and TheCityUK over concerns they could negatively impact firms’ reputations or valuations and hurt Britain’s attractiveness as a financial centre.
An influential group of peers wrote to the FCA’s chief executive, Nikhil Rathi, in April urging him to halt the plans and warning they could hurt “blameless” companies.
On Tuesday, Chambers said the FCA had “heard loud and clear that the criteria we consulted on were too high level and lacked specificity”.
Still, she argued the FCA’s proposals could support consumer decision-making, help other firms correct their own conduct and assure whistleblowers that the regulator’s “door is open”.
Chambers added that the plans “could address the odd situation we find ourselves in, where a fellow UK regulator can announce an investigation, but we would be unlikely to be able to announce – also in a factual and measured way – that we too were running enquiries”.
She cited the FCA’s announcement of a £15m fine for PwC last month, which came roughly two years after fellow regulator the Financial Reporting Council revealed an investigation running parallel to the FCA’s.
Chambers said the FCA would “intensify our engagement” this autumn, including “meeting with trade associations, firms, those on all sides of the debate”.
“As part of this, we recognise the desire for greater definition on any new public interest test,” she added.
“Later this autumn we plan to provide greater detail on how it could work in practice. To bring this to life, we will publish case studies examining how the criteria might apply and what announcements could look like, as well as more information on the numbers of cases that might be affected.”