The Financial Conduct Authority is proposing to name firms under investigation at an earlier stage to increase transparency about its enforcement work and to deter wrongdoing.
In a consultation paper published this morning (February 27), the regulator set out its plans to be more transparent when an enforcement investigation is opened.
As part of the proposals, the FCA will publish updates on investigations “as appropriate” and be open about when cases have been closed with no enforcement outcome.
This includes publicly announcing when it has opened an enforcement investigation, including the identity of the subject of the investigation, as well as publishing updates, if it is in the public interest to do so.
At present the FCA only publishes information on its enforcement action when it leads to an outcome, for example a sanction or a notice to pay redress.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “By being more transparent when we open and close cases we can enhance public confidence by showing that we are on the case.
“At the same time, we will amplify the deterrent impact of our work by enabling firms to understand the types of serious failings that can lead to an investigation, helping them to change their own behaviour more quickly.
“Greater transparency will also drive greater accountability for us as an enforcement agency.”
The changes would mainly apply to firms rather than individuals because of rules the FCA has to follow around privacy.
The UK GDPR rules do not allow personal data processing unless there is a lawful reason for it.
The FCA stated: “For regulators such as the FCA, this processing must generally be necessary for them to perform a task in the public interest or in the exercise of official authority.”
Therefore it is not allowed to publish the name of an individual we are investigating unless it is necessary to do so for the purposes of its investigation.
What is in the public interest?
The FCA is proposing to follow a new public interest framework to inform its decision-making.
It said it will follow it in deciding if and when, to publish updates on any investigation but it will decide what to publish on a case-by-case basis.
The regulator said it will make this information public if it felt it would:
- enable the interests of potentially affected customers, consumers or investors to be protected
- help its investigation, for example by encouraging potential witnesses or whistleblowers to come forward
- address public concern or speculation
- provide reassurance that it is taking appropriate action
- deter future breaches of its rules
- otherwise advance one or more of its statutory objectives, including protecting and enhancing the integrity of the UK financial system.
It will also follow a set of criteria where it is not in the public interest. Such as if it is likely to have an adverse impact on:
- the conduct of its investigation or an investigation by another regulatory body or law enforcement agency
- the interests of consumers, or
- the stability of the UK financial system or our ability to otherwise carry out our statutory functions.
Steve Smart, joint executive director enforcement and market oversight at the FCA, said: “Reducing and preventing serious harm is a cornerstone of our strategy. By delivering faster, targeted and transparent enforcement, we will reduce harm and deter others.
“We will also make greater use of our intervention powers to stop harm in real time.”
amy.austin@ft.com
