The British FCA defends proposal to disclose investigated companies

The Financial Supervisory Authority (FCA), the UK’s financial regulator, has reportedly faced industry backlash over its proposal to publicly disclose companies under investigation.

Despite criticism from industry groups and lawmakers, the FCA told the finance committee on Wednesday (May 8) that it remains committed to its initiative, according to Reuters reported Wednesday.

According to the report, the FCA unveiled plans in February to increase transparency by disclosing company investigations earlier. The aim is to prevent misconduct, encourage whistleblowing and reassure the public that the regulator is actively addressing misconduct.

Currently, the FCA typically discloses details of an investigation after it has concluded, the report said.

However, according to the report, the new approach proposed by the regulator faced strong resistance.

According to the report, lawmakers, industry groups and lawyers argue that naming the companies under investigation before evaluating all the evidence risks unfairness.

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

Minister for Financial Services Bim Afolami criticized the FCA’s focus on issues such as “naming and shaming” which are “non-core” and called on the regulator to prioritize behavior and ensure the proper functioning of the financial system for consumers and producers.

During the Finance Committee hearing, the CEO of the FCA said Nikhil Rathi acknowledged the industry’s unexpectedly harsh response but rejected calls to abandon the proposal, the report said. Rathi stressed that the FCA would need several months to consider the backlash and incorporate feedback into the development of the disclosure criteria.

FCA Chairman Ashley Alder According to the report, there is no right to disclose or name companies under investigation. Both Alder and Rathi told the committee that the FCA would take a factual and measured approach and ensure that any disclosure policies were in the public interest. They argued that, when analyzed in depth, 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 Fraud prevention.