Financial Conduct Authority has pulled its ‘name and shame’ plan, which would have seen the City watchdog disclose firms under investigation if it believed this was in the public interest.
The move from the watchdog comes as it also pauses several other regulatory measures.
Its ‘name and shame’ proposals have come up against fierce City opposition since they were tabled in February last year, with firms saying the move will destabilise valuations and staff at companies who have not yet been found guilty of misconduct.
The House of Lords Financial Services Regulation Committee said the regulator’s consultation with firms on these plans, despite a rejig in November, has been “an abject failure.” Peers concluded the plan should be shelved last month.
“While consumer and whistleblowing groups generally supported greater transparency, industry remains largely opposed to certain aspects – specifically publicising an investigation into a regulated firm carrying out authorised activity when a public interest test is met,” said Financial Conduct Authority chief executive Nikhil Rathi in a letter to the Treasury Committee yesterday (11 March).
Rathi added: “Given the lack of consensus, we will not proceed with this and will therefore stick to our existing exceptional circumstances test to determine if we should publicise investigations into regulated firms.”
But the regulator said it would push ahead with other parts of the plan, “where there is broad support and much less concern”.
- Confirming investigations officially announced by firms, or another regulator
- Issuing public notes on the potentially unlawful activities of unregulated firms and regulated firms operating outside the regulatory perimeter. Around 60% of the watchdog’s probes cover unregulated firms, “which are often frauds involving significant consumer harm, where we have no supervisory tools available”
- Publishing greater detail of issues under investigation on an anonymous basis
The move comes after a key Mansion House speech by Chancellor Rachel Reeves last November where she said red tape on City firms had “gone too far” following the 2008 financial crisis.
She added that she expected the Square Mile to play a key part in the government’s push for growth.
The FCA added that the 2023 work that began with the Prudential Regulation Authority on diversity and inclusion would no longer continue in light of “expected legislative developments and to avoid additional burdens on firms at this time”.
It will also pause its ongoing work on non-financial misconduct — such as bullying, harassment and discrimination — and will “take some further time to get this right and will set out next steps by the end of June this year”.
The last few months have also seen several heads of regulatory bodies step down as the government pursues its growth agenda.
Last month, the Financial Ombudsman Service chief executive Abby Thomas became the fourth head of a regulator to suddenly leave her post since November.
Former Amazon UK head Doug Gurr was installed as interim chair of the Competition and Markets Authority after Marcus Bokkerink also left suddenly in January, after just over two years in the role.
