Regulation  

FCA ‘reconsidering’ warning notice publication plans

The Financial Conduct Authority is “reconsidering” its approach to publishing information about warning notices issued to authorised firms and individuals, amid industry concern over the reputational damage of new plans to name and shame before final decisions are handed down.

In a paper detailing FCA responses to industry feedback on its ‘Journey to the FCA’ document published in October 2012, the regulator said although it has previously confirmed the process it will follow when deciding whether to publish details of warning notices, it is rethinking this following a further consultation between March to June 2013.

The watchdog had said in March it would “normally” publish information on warning notices unless a firm could prove it would likely lose staff, or even go under altogether, as a result. Reputational damage alone would not prevent publication as “this is an inevitable consequence of publication”, it said.

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However, a strong response to this latest consultation paper saw widespread concern in the industry over the risks of reputational damage to those who might later be found not to be in breach of FCA rules.

The FCA said it expects to publish its final policy later this year.

The response document published by the regulator also revealed its approach to several other elements of the stated post-Financial Services Authority approach that have been the subject of industry concern.

FCA to investigate ‘value for money’

The FCA clarified its position to ‘value for money’ for consumers, in response to feedback that its plans would undermine free market principles and set it up as a ‘price regulator’.

The FCA revealed that while it does not expect to set price controls in the same way as a utility regulator, it is ‘investigating’ this area as part of its competition.

It said it will be “very interested” in pricing and margins as an “investigative part of its competitions mandate” and will regularly collect this information in market studies and other work.

The regulator emphasised that, in certain circumstances, interventions over value for money may be “useful to minimise harm to consumers”. This follows on from calls from consumer organisations for the watchdog to look more closely at pricing and charging.

FCA to develop ‘value for money’ framework for itself

There has been much written recently about regulatory fees, with the advisory sector enduring another 13 per cent year-on-year increase after the April switchover from the FSA.

Firms said in their feedback would like to better dialogue about how regulatory bodies set fees and the FCA said it has discussed with its stakeholders the possible alternatives to the current model for recovering the costs of regulation.

The FCA said it is aiming to produce detailed proposals in autumn 2013 - and that it is also seeking to develop a “value for money” framework, which will be published in due course.

It added in its response that the value it delivers to stakeholders will be a “key measure” of its performance as a regulator.

The National Audit Office is currently conducting a review into the FCA’s value for money, which is due in early 2014.