Top City groups have rounded on the Financial Conduct Authority (FCA) again today as a consultation on its controversial plans to ‘name and shame’ firms under investigation comes to a close.
The FCA has faced fury from the City in recent weeks over proposals to announce investigations and publicly identify the firms facing probes.
While the FCA’s two top enforcement chiefs doubled down on the changes yesterday, scores of City firms and trade groups have now written to the watchdog demanding it withdraw or row back on the plans.
In a response to the FCA’s consultation, submitted yesterday, trade group UK Finance warned that “no other other G7 country currently takes the FCA’s proposed approach” and the plans could “harm the UK’s competitiveness and attractiveness as a financial centre”.
Writing in City A.M., UK Finance chief executive David Postings said today the plans also run counter to the idea of “innocent until proven guilty”.
“The crux of the problem with the FCA’s plans is that there is a fundamental disconnect between the stated aims and how these things would operate in practice,” Postings wrote.
“The FCA says the fact they might announce an investigation doesn’t mean they will have actually decided whether there has been misconduct. But that’s not how it will be heard and reported on.”
The banking and finance body was among 15 trade groups to write to the Chancellor on Friday calling on him to intervene and block the measures. Among the other bodies to back the calls were the Association of British Insurers, the City UK and fintech group Innovate Finance.
Central to the groups’ fears are the fact that some 65 per cent of the FCA’s current investigations are closed with no action taken, meaning that firms could face reputational damage despite being later acquitted by the regulator.
Speaking with City A.M., Innovate Finance chief executive said the fear of facing a public probe also risked deterring firms from trying to innovate.
“This type of regulatory decision is detrimental to the UK’s growth companies at a time when we need them most,” Hirt said. “Ultimately, it’s also a move that will harm consumers by restricting innovation and limiting the choices they have on offer.”
In its submission to the regulator, financial services lobby group The CityUK said the plans were “fundamentally flawed”.
“If implemented they would seriously undermine the UK’s international competitiveness and make the UK a less attractive place to do business and invest, ultimately hindering the growth of the industry and of the wider economy,” the group said.
The feedback from trade groups points to the scale of discontent that has been running through the City since the initial announcement of the plans in February.
Ministers have also privately voiced their discontent, with both the Prime Minister and Chancellor said to be “fuming” over the proposals, Politico reported.
However, the FCA has doubled down on the plans despite resistance. Writing in City A.M. yesterday, the watchdog’s enforcement chiefs, Therese Chambers and Steve Smart, said they were looking to streamline the regulator’s enforcement action and “not seeking to shame firms”.
“It’s about shining a spotlight on a case in a way that will deter others, raise standards, reassure consumers, counter ill-founded speculation that is damaging to firms or a sector, or encourage people to come forward with evidence and intelligence,” they wrote.