FCA Drops Controversial ‘Name and Shame’ Plan for Investigated Firms

The UK’s Financial Conduct Authority (FCA) has decided to abandon its plan to publicly disclose the names of certain firms under investigation. The regulator is set to announce today that it will not move forward with introducing a public interest test for naming companies and will instead continue its current policy of only identifying firms in exceptional cases.

The FCA had already revised its approach in November, softening its initial stance on the ‘name and shame’ initiative. Under the amended proposal, firms would have been given ten days to respond to a draft announcement before the FCA disclosed their names, with an additional two days’ notice if the regulator decided to proceed with the publication. Despite these modifications, the plan remained highly contentious. Just last month, a committee in the House of Lords called on the FCA to drop the proposal, describing it as an “abject failure” and criticizing the consultation process behind it.

Confirming its decision to withdraw the initiative, the FCA issued a statement saying, “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 regulator’s chief executive, Nikhil Rathi, reinforced this position, stating, “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.”

While abandoning the ‘name and shame’ plan, the FCA indicated that it is still exploring related areas, including the possibility of issuing public notifications focused on potentially unlawful activities by unregulated firms. Additionally, the regulator said it may consider publishing more detailed information about ongoing investigations without identifying the companies involved.

The FCA originally introduced the ‘name and shame’ proposal in February 2024, with the aim of increasing the deterrent effect of its investigations by identifying financial companies under scrutiny much earlier in the process. This would have marked a significant shift from the current approach, where the regulator only announces investigations in highly limited circumstances. However, the proposal quickly faced widespread resistance from the financial sector, with firms arguing that public disclosure could unfairly damage businesses that were ultimately found to be innocent. Politicians also voiced concerns, claiming the initiative was anti-business and would make UK financial firms less competitive.

By September, the FCA had acknowledged that the plan had become a “lightning rod” for criticism, admitting that the level of opposition from financial institutions was substantial. Even after attempting to scale back the proposal, the initiative continued to attract major pushback, culminating in the House of Lords’ formal request last month for the regulator to abandon the plan altogether. Now, with the FCA officially dropping the initiative, financial firms will continue to be named in investigations only in rare and exceptional circumstances.

By fLEXI tEAM