The boss of the Financial Conduct Authority (FCA) rejected a direct request from the House of Lords to extend a consultation on its controversial ‘name and shame’ plans, it has emerged.
Speaking at a session of the Lords’ financial services regulation committee, the committee’s chair, Lord Forsyth of Drumlean, said that FCA chief Nikhil Rathi last night wrote to the body rejecting its pleas to pause the process.
“We just had a letter overnight from the chief executive of the FCA, declining to extend the consultation period but we of course will be taking evidence on that including from him,” Lord Forsyth told the Committee.
The rejection came after the committee called on the FCA to “halt” its plans to name firms under investigation last month amid fury across the City.
Last week, the group publicly fired a barb at Rathi for a lack of proper engagement with its calls for a pause on the process, saying it would summon him to be questioned on why it was pressing ahead despite resistance.
The FCA has been hit with a backlash after it revealed plans in February to begin publicly naming companies facing an enforcement investigation on a more regular basis and at an earlier stage.
The regulator closed a consultation on the plans last week after already extending the measures by three weeks.
Since announcing its ‘name and shame’ proposals, the watchdog has faced mounting calls to back down after two top trade bodies, UK Finance and The CityUK, hardened their stance against the plans in recent weeks.
Both groups have raised concerns the plans would hamper the appeal of the UK as a place to do business.
The Chancellor Jeremy Hunt also waded into the debate last week and urged the regulator to “re-look” at the measures due to concerns that they did not fall in line with its secondary objective on growth and competitiveness.
Under its landmark package of Edinburgh Reforms, the government last year introduced a new secondary objective for City regulators which would require them to consider growth alongside its primary objectives of consumer protection.
Speaking with the financial services regulation committee today, Miles Celic, boss of the City UK, told Lords there were concerns that the FCA was adopting an approach of “shoot first ask questions later” and was hurting the appeal of the UK as a place to do business.
“The UK is current political and regulatory mindset is often too focused on eliminating risk of loss from the financial system. Too often there is a default approach of stopping things from going wrong rather than helping things to go right,” Celic said.
“That is a stark contrast to the starting point that we see in some other jurisdictions. If not addressed, it is our sense that this will have deeply negative consequences for economic growth.”
Rathi and FCA chair Ashley Alder are set to be quizzed by MPs on the plans this afternoon. The FCA has been contacted for comment.