The financial watchdog has launched a fightback amid growing pressure from the City and ministers to drop plans to name and shame firms it is investigating.
The Financial Conduct Authority (FCA) used a newspaper article to mount a defence of the proposals – even as the industry stepped up its opposition via a letter urging Jeremy Hunt to intervene.
At stake are plans set out in February which would see the regulator drop its policy of not naming firms that it is investigating other than in exceptional circumstances.
Instead, it would decide whether to do so on a case-by-case basis depending on whether it is in the public interest. A consultation on the plans closes today.
They have provoked a backlash from the sector – which argues they will damage UK competitiveness – and come at a time when ministers are becoming frustrated about the FCA’s approach.
‘Name and shame’: The Financial Conduct Authority wants to drop its policy of not naming firms that it is investigating other than in exceptional circumstances
And it is understood that the Chancellor would not support what he regards as a ‘disproportionate regulatory environment’.
But in an article for City AM, the FCA’s joint directors of enforcement, Therese Chambers and Steve Smart, rejected the criticisms.
They said there was no plan to name firms in every investigation and that it was not about ‘seeking to shame’ companies.
The article said: ‘It’s about shining a spotlight on a case in a way that will deter others, raise standards, reassure customers, counter ill-founded speculation, or encourage people to come forward with evidence and intelligence.’
Analysis of firms investigated in the past had shown there was little impact on their share price when probes became public, Chambers and Smart added.
And they rejected the argument they were damaging the UK’s attractiveness globally.
‘Firms want to come to a jurisdiction where they know that rules will be enforced, integrity upheld, bad actors challenged and a level playing field established,’ the regulators said.
But the scale of opposition was underlined in a letter to the Chancellor from 16 trade associations including UK Finance and the Investment Association. It said: ‘At present there is no other G7 country that currently takes the approach on enforcement that the FCA is proposing.’
City minister Bim Afolami said: ‘We are engaging with both the FCA and industry as the proposals are developed.’
