FCA scraps 'name and shame' proposals after widespread backlash

The FCA has abandoned its plans to introduce 'name and shame' proposals for firms under investigation following widespread industry criticism.

First announced last year, the regulator had proposed identifying firms at the outset of an investigation, using a 'public interest' framework, providing the firm with 24 hours’ notice that it is doing so.

However, last month the cross-party House of Lords Financial Services Regulation Committee called on the FCA to not proceed with the proposals if concerns have still not been adequately addressed.

The Committee concluded that the FCA has "not made a convincing case for a change to its existing powers", which already allow it to announce an enforcement investigation early in exceptional circumstances.

It added that the changes "may expose firms to significant reputational damage before the facts of the case have been established".

The FCA's initial consultation prompted widespread backlash from across the financial services sector, including the previous Chancellor.

In a statement published today, the FCA said: "Given the lack of consensus, we will not take forward our proposal to shift from an exceptional circumstances test to a public interest test for announcing investigations into regulated firms."

The FCA confirmed that it will continue with its existing stricter 'exceptional circumstances' test.

The regulator added: "Following extensive engagement, there is support for reactively confirming investigations already in the public domain; public notifications which focus on the potentially unlawful activities of unregulated firms and regulated firms operating outside the regulatory perimeter; and publishing greater detail of issues under investigation on an anonymous basis. We will take forward these proposals, and publish our final policy by the end of June."

Nikhil Rathi, CEO of the FCA, commented: “We are speeding up our enforcement work. On our enforcement transparency proposals, we have always aimed to build a broad consensus. Considerable concerns remain about our proposal to change the way we publicise investigations into regulated firms, so we will stick to publicising in exceptional circumstances as we do today. We will implement changes which have commanded wider support and which we believe will help support our efforts to protect consumers from harm."