FCA defends ‘name and shame’ proposals after backlash from City and Government
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The UK’s financial watchdog has said it was not expecting the “stern reaction” to its plans to “name and shame” firms it is investigating, after facing backlash from the City and the Government.
The Financial Conduct Authority (FCA) defended the proposals and stressed that they were still being deliberated.
Nikhil Rathi, the FCA’s chief executive, and chairman Ashley Alder were quizzed by MPs on the Treasury Committee on Wednesday.
It is important that no decision has been made so there is no decision to reverse
It followed the regulator revealing it was considering announcing when it has opened enforcement investigations into financial firms, which it currently only does in very limited cases.
It would mean “naming and shaming” the companies being probed, regardless of whether or not it decides there has been misconduct or a breach of its rules.
The move prompted widespread backlash, including from Chancellor Jeremy Hunt, who warned the watchdog to reconsider its plans over fears it could stifle growth and international competitiveness.
Several trade bodies including the City of London Corporation and PIMFA also raised concerns that making investigations public could have a damaging impact on firms, their staff and customers, before any conclusions are reached.
During Wednesday’s Treasury Committee hearing, Mr Alder said: “In truth, we weren’t at the time we put this out expecting such a stern reaction as has come from industry.
“It is important that no decision has been made so there is no decision to reverse.”
We will take our time over this to make sure we get it right
Mr Rathi explained that there were issues with the FCA’s whistleblowing service, which encourages people to report a firm or individual if they suspect wrongdoing.
“There are two issues with our whistleblowing function at the moment: awareness and confidence,” he said.
“We don’t tell (whistleblowers), because we aren’t able to tell them, that their concern is being formally investigated because of the restrictions we operate under.”
It means that in some cases, the FCA may decide to announce an investigation in order to secure more witnesses.
The boss stressed that it would be on a case-by-case basis should the plans go ahead.
“We will take our time over this to make sure we get it right,” Mr Rathi said, adding that the FCA was going to go over all the feedback it had received from the industry over the next few months.
