The Financial Conduct Authority will seek to publish certain warning notices without naming the firm involved where there is a public interest in highlighting the issue but ‘naming and shaming’ would be considered unfair, according to final rules published today (15 October).
In March of this year, then-regulator the Financial Services Authority proposed publishing warning notices before any enforcement action had been taken in what were widely described as ‘name and shame’ rules that provoked controversy across the sector.
At the time, the regulator said it would consider allowing small firms to escape the naming-and-shaming if they could demonstrate clients would move their business to competitors. However it did say it would not acquiesce to requests not to name a firm or individual on the basis of potential reputational damage alone.
In August the FCA said it was reconsidering its proposals following industry feedback.
In a policy statement published today, the FCA said “there may be situations where we consider it is appropriate to publish details of a warning notice to make the nature of our concerns public, but where we consider it is not appropriate to identify its subject..
“In this situation, we consider that the interests of transparency will usually make it appropriate to publish an anonymised warning notice statement rather than no information. So we will now consider these two issues separately.”
The regulator will also slightly lower the threshold that a person has to meet to demonstrate unfairness in respect of having their name published.
The changes come in response to strong industry reaction to the proposals. Although the FCA said consumer groups generally favoured the proposals, it added that industry respondents had more concerns.
Respondents from within the industry disagreed with the presumption of publication, argued in favour of anonymised statements, and had concerns with how the FCA proposed to identify an individual.
They also argued that the threshold for determining unfairness was set too high and that the publication of a notice of discontinuance would not make up for the harm caused by the published warning statement.
