FCA Chief Exec updates on the regulator’s enforcement “naming and shaming “ proposals
In a speech delivered at the City Dinner at the Mansion House in London on 17 October 2024, Financial Conduct Authority ("FCA") Chief Executive, Nikhil Rathi, gave a further update on the regulator’s proposals to name firms that are under enforcement investigation.
We have previously commented on these hugely controversial proposals since they were first floated back in February 2024. But in summary, the FCA wants to publicly announce the opening of an enforcement investigation, identifying the subject of the investigation and publish updates “as appropriate” on its investigations into alleged misconduct by the firm.
Back in September, Therese Chambers, Joint Executive Director of Enforcement and Market Oversight, said that FCA was looking to tweak the original “name and shame” proposals and would be consulting further with industry stakeholders.
Mr Rathi has now provided the market with a further update on the FCA’s thinking and commented:
“We have proposed being more transparent on enforcement. Not in all cases. But no longer just by exception. Because our current approach doesn’t work. We think a degree more openness can reduce harm, build whistleblower confidence and benefit firms that play by the rules. We know the proposals came as a surprise, falling short of our ‘predictability’ test.
And we have heard the strength of opposition and some concern that we could be an international outlier, detracting from competitiveness.
We want to work through this together, mindful of all our objectives.”
He said that in November 2024 the FCA will provide more data and case studies on how a “public interest test” could work in practice (the FCA has previously said that publicity decisions would be informed by adopting a new public interest framework):
“Where we decide to name a firm in the public interest, it wouldn’t by default be when an investigation starts. Unlike in many jurisdictions, our enforcement investigations typically follow at least a year of supervisory engagement.”
Mr Rathi added that the FCA is proposing to give firms longer to make representations about the impact of the proposals, that the regulator will continue to listen to feedback from the industry and will finally decide on naming and shaming early in 2025.
Comment
Garon Anthony, Financial Services partner, commented.
“As we predicted, the FCA is not giving up on the idea of publicly announcing the opening of an enforcement investigation and clearly is, despite widespread market objections, of the view that its proposals are a good thing. Again, I would urge firms to respond to whatever new information that the FCA publishes next month and make the strength of their feelings known to the regulator”.
