FCA Admits 'Name and Shame' Strategy Becoming a “Lightning Rod” Amid Pushback from Firms

The UK’s Financial Conduct Authority (FCA) has acknowledged that its controversial strategy to publicly name companies under investigation has become a “lightning rod” for criticism. The regulator’s admission signals a further step back from its initial plans, following earlier indications in July that the approach could be reconsidered.

The FCA had proposed earlier this year to ‘name and shame’ financial institutions under investigation, if it believed doing so served the public interest. However, the proposal has faced significant opposition from businesses, with many arguing that the move would be unfair, particularly to companies ultimately found innocent after an investigation.

Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, addressed these concerns during a recent speech at an event in London. “We are not proposing moving from publicity in zero cases now, to 100% of cases in the future,” Chambers said. She clarified that the regulator intended to take “a case-by-case approach following assessment of clearly defined criteria – including consideration of the potential impact on the firm and market.”

Chambers also admitted that the criteria outlined in the FCA’s consultation lacked clarity. “We heard loud and clear that the criteria we consulted on were too high level and lacked specificity,” she said.

The FCA’s plan has evidently stirred strong reactions, with Chambers acknowledging that it had become a “lightning rod” of controversy among regulated firms. “The companies we regulate were overwhelmingly against [it],” she added, noting that the organization is taking these concerns seriously and will not rush the implementation of the ‘name and shame’ strategy. Instead, she emphasized that the proposals are “very much an ongoing conversation.”

The proposed move would align the FCA with other UK regulators, such as the Financial Reporting Council, which regularly announces when it launches investigations. It was believed that publicizing investigations would act as a deterrent against misconduct in the financial sector.

However, regulated firms have argued that the strategy would be unjust, particularly because many FCA investigations are ultimately closed without leading to further action.

By fLEXI tEAM