FCA softens plan to ‘name and shame’ more companies

The financial regulator has significantly watered down plans to “name and shame” the companies it is investigating after a backlash from the City.
In revised proposals published by the Financial Conduct Authority on Thursday, the watchdog conceded it had made a mistake in the announcement of its plans in February by failing to warn the industry they were coming.
It has now made a series of changes, including a stricter public interest test and allowing firms more time to argue against the disclosure of an inquiry. It had originally proposed one business day, a sticking point for the industry.
The regulator said that if implemented, it expects the reforms “would only increase the number of proactive announcements into regulated firms by a small amount”.
Even so, they could lead to a doubling of investigation disclosures from the current low level, the authority added. Furthermore, the changes would result in announcements about inquiries into unregulated firms, which are not disclosed at present.
The watchdog rarely discloses investigations into financial services companies. It wants to take a more transparent approach and publicise its inquiries where this is in the public interest.
While it has argued this would bring the authority into line with other bodies, including the Serious Fraud Office, the plan caused alarm in the industry and led to criticism that companies would be “named and shamed”, even though the majority of the FCA’s investigations result in no further action.
“I want to acknowledge that we could have landed our proposals better than we did, they came as a surprise,” Therese Chambers, the authority’s joint executive director of enforcement and market oversight, said. “We could have explained our thinking better and the effect of that was that we were not able to have as constructive a conversation as we would have liked.”
Under the revised plan, companies would be provided with a draft of any potential announcement and given at least 10 business days to make representations. Should the regulator decide to go ahead, firms will be provided with the final text of the announcement two business days before publication. In theory, companies could use this time to take the authority to court to try and block announcements.
Other changes include new criteria in the public interest test the FCA will apply, including an assessment of the impact of a public announcement on a company as a “central” consideration. It will also consider “the potential for an announcement to seriously disrupt public confidence in the financial system or the market”.