FCA announces reboot of controversial enforcement naming and shaming proposals

Further to our most recent post on this long running issue, the Financial Conduct Authority (“FCA”) has finally announced proposed reforms to its enforcement “naming and shaming” proposals that it first announced back in February 2024. 

The regulator is not giving up on naming and shaming but has now tweaked its original proposals in response to some furious industry reaction. 

Consultation Paper 24/2 now sets out four changes to the FCA’s original proposals:

• The potential negative impact on a firm of an enforcement investigation being publicly announced would be explicitly considered as part of a public interest test (the FCA proposes to consider whether an announcement would be in the public interest) - previously it was not included as one of the factors.
• Firms will be given 10 days’ notice ahead of any announcement being made, rather than the 1 day originally consulted on. During this period, firms could make representations to the FCA. If the FCA still decides to announce, firms would then have an additional 48 hours’ notice before an announcement is published.
• The potential for an announcement to seriously disrupt public confidence in the financial system or the market is included as a new factor in the public interest test.
• The FCA has clarified it will not announce investigations which began before any changes to the policy come into effect. (Although it may reactively confirm investigations which are already in the public domain, where this is in the public interest).

The FCA predicts that if the proposals come into effect, they would only lead to additional proactive announcements of investigations into regulated firms in a very small number of cases. Therese Chambers, joint executive director of enforcement and market oversight, commented:

'We have heard the strength of feedback to our original proposals, and we are making changes as a result. We hope the greater detail published today supports the further engagement we hope to have on the proposals, before we make any final decisions.'

The FCA says that it is now seeking views on how the public interest test could work in practice, based on more detailed criteria and data. It will continue to meet with firms, trade associations, consumer groups, the legal community and others. The FCA Board is then aiming to make a final decision on the naming and shaming proposals in the first quarter of 2025. It has asked for comments on Consultation Paper 24/2 by 17 February 2025.

Garon Anthony, Financial Services Partner, commented:

“As we predicted some time ago now, the FCA is not giving up on these controversial proposals despite having made some significant procedural concessions designed to ally industry concerns. 

However, firms will still be concerned about how frequently, and in what circumstances, the FCA will seek to publicly announce investigations, especially as it has not published a revised draft of the relevant Enforcement Guide text so as to put meat on the bones of CP24/2. By way of example, whilst firms can make representations to the FCA on a proposed draft announcement, there seems to be no obligation on the regulator to consider or amend the announcement in the light of such representations. We strongly recommend that firms continue to engage with the FCA and provide comments by the deadline if they remain unconvinced by the regulator’s new proposals. ”