UK FCA to change plan to name firms under enforcement investigation

The Financial Conduct Authority (FCA) has confirmed it is reformulating its plans to announce the names of firms it has under investigation, in a consultation paper published on November 28.. The move follows heavy criticism of its earlier approach.

The regulator said the consultation would now “explicitly consider” any negative impact on firms as part of the public interest test it carries out before naming a firm, as well as considering an announcement’s potential to “seriously disrupt confidence in the financial system”.

Firms will be given 10 business days’ notice ahead of an FCA announcement they are under investigation, rather than one day, as originally proposed, so will have more to prepare for publication or to challenge the decision.

Therese Chambers, FCA joint executive director of enforcement and market oversight, said in a statement published alongside the consultation: “We have heard the strength of feedback to our original proposals, and we are making changes as a result. We hope the greater detail published today supports the further engagement we hope to have on the proposals before we make any final decisions.”

FCA chief executive Nikhil Rathi previously set out the revisions when he gave evidence to the House of Lords Financial Services Committee earlier this month. Rathi told the committee that an enforcement investigation typically only commences after 18 months of intensive supervision so firms would not be caught off-guard by any announcement.

Fewer enforcement cases

The consultation sets out that the FCA expects to open between 10 and 12 formal enforcement investigations a year in future. This is a considerable drop on the 34 opened in former executive director of enforcement Mark Steward’s last year at the regulator.

According to the FCA, most enforcement investigations are already made public by the firms under investigation and the proposals would see only a small number of additional investigations made public.

Chapter five of the consultation contains case studies setting out the circumstances under which the regulator would seek to name a firm under investigation. Naming will not be retrospective and so will not apply to any enforcement investigations underway prior to the new rules coming into force.

The consultation closes February 17, 2025.