PYMNTS MonitorEdge May 2024

UK’s FCA Defends Proposal to Disclose Companies Under Investigation


The Financial Conduct Authority (FCA), the United Kingdom’s financial watchdog, has reportedly faced a backlash from the industry regarding its proposal to publicly disclose companies under investigation. 

Despite criticism from industry bodies and lawmakers, the FCA told the Treasury Committee Wednesday (May 8) that it remains committed to its initiative, Reuters reported Wednesday.

The FCA unveiled its plans in February to enhance transparency by disclosing corporate investigations earlier, according to the report. The aim is to deter wrongdoing, encourage whistleblowing and reassure the public that the regulator is actively addressing misconduct. 

Currently, the FCA typically reveals details of an investigation after its resolution, the report said.

However, the regulator’s proposed new approach has been met with fierce opposition, per the report.

Lawmakers, industry bodies and lawyers argue that naming companies under investigation before assessing all evidence risks unfairness, according to the report.

Additionally, critics claim that the FCA’s proposal contradicts its duty to promote the international competitiveness of the financial industry, the report said. They say the “naming and shaming” proposal may deter international investment and send the wrong signal to investors and consumers. 

Financial services minister Bim Afolami criticized the FCA’s focus on issues such as naming and shaming that are “non core” and urged the regulator to prioritize conduct and ensure the proper functioning of the financial system for consumers and producers.

During the Treasury Committee hearing, the FCA’s CEO Nikhil Rathi acknowledged the unexpected stern reaction from the industry but dismissed calls to abandon the proposal, per the report. Rathi emphasized that the FCA would take several months to consider the backlash and incorporate feedback into the development of the criteria for disclosure.

FCA Chair Ashley Alder said that there is no presumption to disclose or name companies under investigation, according to the report. Both Alder and Rathi told the committee that the FCA would apply a factual and measured approach, ensuring that any disclosure policies are in the public interest. They argued that, upon deep analysis, such disclosures would not hinder competitiveness but rather contribute to it.

In another recent move, the FCA said in March that its priorities for 2024 include digital innovation and fraud prevention.