The Financial Conduct Authority (FCA) is set to “fundamentally reshape” its controversial ‘name and shame’ policy following backlash from the City.
FCA chair Ashley Alder admitted today that the watchdog had bungled the unveiling of the policy, stating it was “probably not” the regulator’s finest hour.
“We all acknowledged within the organisation that it could have been trailed a bit better beforehand and it didn’t appear in the regulatory grid, which is the place in which forthcoming consultations and proposals are normally positioned,” Alder said, speaking in front of the House of Lords’ financial services regulation committee.
While the watchdog had been ready to present the new plan to the committee today, it has decided to wait, with the FCA’s chief Nikhil Rathi saying it will be published “in the next week or so”.
“It was appropriate for us to wait for this hearing so that we didn’t give you something at very short notice to consider,” Rathi said.
Rathi also admitted that the announcement had led to “some misunderstandings” and said the watchdog had made some changes and clarifications to the policy.
The FCA will “absolutely not be announcing every investigation,” he said, adding that “this is not a case of us opening up the entire book of investigations, that was never our intention”.
Many City figures have criticised the policy, arguing that the majority of FCA probes close with no action taken, meaning firms could still face reputational damage even if it later decided to close or drop an investigation.
Rathi emphasised the FCA already has the power to name companies it is investigating in exceptional circumstances. “If we do this in two or three more cases of regulated firms a year, then we are not talking about a big change,” he added.
However, he said the FCA will scrap its plan to inform companies that they are being investigated only one day before it publicly announces a probe, and instead it will give firms 10 days notice.
The regulator will also introduce a public interest test to help it determine when it is appropriate to disclose the name of a company being investigated, he added.
News that the FCA was looking to rework the policy was welcomed by City groups today.
“A commitment from the FCA to fundamentally reshape its plans on enforcement investigations is good to hear,” CityUK chief Miles Celic told City AM.
“We look forward to seeing the finer details of these proposals when they are published in the coming days and hope that they fully address the concerns raised by industry, government, opposition, and others over the last few months.”