Naming and shaming: FCA backtracking and residual uncertainty

The FCA has today confirmed that it has shelved its proposals to publicise live enforcement investigations. This announcement follows unprecedented criticism from almost all stakeholders including industry and lawmakers. 

In its statement, the FCA said that “Given the lack of consensus, we will not take forward our proposal to shift from an exceptional circumstances test to a public interest test for announcing investigations into regulated firms.” 

The proposals had been heavily criticised as unnecessary, out of step with international regulators, and likely to harm the competitiveness of the UK financial services market at a time when the FCA is required to pursue a growth objective.

The level of industry criticism was compounded by the surprise nature of the proposals. As the House of Lords Financial Services Regulation Committee (Lords FSR Committee) pointed out, the plan was not trailed in the regulatory initiatives grid or via prior discussion paper, nor was a cost benefit analysis conducted – things the Lords FSR Committee has stated it believes should not happen again.  

Whilst the most controversial of the FCA’s proposals has been dropped, this is not the end of the story. The FCA still plans to issue a final policy statement by the end of June which will include the FCA’s final rules for: 

• reactively confirming investigations already in the public domain (for example, following market announcements or other disclosures made by firms themselves or sometimes announcements by a partner regulator);
• making public notifications which focus on the potentially unlawful activities of unregulated firms and regulated firms operating outside the regulatory perimeter; and
• publishing greater detail of issues under investigation on an anonymous basis (for example, via a regular bulletin such as “Enforcement Watch”). 

Although the FCA has stated that there is wider support for these proposals, the finer details have not been disclosed beyond what was considered at a high level in the November 2024 consultation “CP24/2, Part 2: Greater transparency of our enforcement investigations”. In a letter to the Treasury Select Committee published today the FCA reported that “nine of the largest financial services trade associations recognised the value of these aspects of our proposals earlier this year”. The FCA also said that it will continue to engage actively with stakeholders before publishing a final policy statement by the end of June, alongside an updated copy of the Enforcement Guide. 

Read our previous article on Naming and shaming: the FCA stands firm.