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The FSA is spearheading a debate that could see the levels of disclosure and transparency of firms and industry sectors increased with the publication of a new discussion document.

Although keen to reassure firms that the level of transparency would still be within existing legislation, the watchdog said it wanted to sound out industry opinion on whether transparency could be used as a form of regulation.

According to the discussion paper entitled Transparency as a Regulatory Tool, the FSA is seeking to "engage in a lively debate" on issues such as whether to publish firm-specific complaints as part of developing a draft Code of Practice on Regulatory Transparency.

The regulator said its aim was to ensure consumer complaints were dealt with promptly and fairly, and firms took appropriate action to rectify the cause of those complaints, highlighting the discrepancy of responses to complaints currently.

"Looking at the data for the 28 firms or groups with the largest number of complaints, the results range from 1 per cent to 66 per cent of complaints closed after eight weeks, and between 3 per cent and 76 per cent of customer complaints upheld by the firm," the paper said. "There may of course be justifiable reasons for these variations, but the analysis and discussion cannot begin until the figures are available."

The paper outlines a number of questions industry members should answer, including an assessment of the cost-benefit analysis, agreeing on a general code of practice, and considering specific situations in which transparency may or may not be suitable.

The deadline for comments is 29 August.

Hector Sants, chief executive of the FSA, said the watchdog believed transparency was an important regulatory tool.

"The discussion paper seeks to initiate debate on how we can better utilise transparency to achieve our regulatory aims," he said.