The head of the Financial Conduct Authority (FCA) has been called to parliament to explain why work on the regulator’s ‘naming and shaming’ proposal is still in progress.
To serve as a deterrent, Britain’s financial watchdog recently suggested publicly announcing the names of firms under investigation, which represents a significant departure from the current practice of naming firms only after an investigation concludes.
In response, the House of Lords’ financial services regulation committee urged FCA CEO Nikhil Rathi to pause work on these plans, citing concerns that this approach could harm the reputations of firms later found to be compliant.
Last Friday, the FCA issued a detailed 29-page defense of its ‘naming and shaming’ proposal and affirmed its intention to continue development.
Committee chair, Michael Forsyth, expressed in a letter to Rathi that the FCA’s response did not adequately address concerns and did not guarantee a pause in implementation for proper scrutiny by the committee.
Consequently, an inquiry is being initiated, and Rathi is being invited to present before parliament. The FCA has not yet commented on the situation.
In a rare public statement, Chancellor Jeremy Hunt has urged the FCA to reconsider its approach. Additionally, the Labour Party has emphasized the importance of considering feedback from public consultations and the perspectives of the industry regarding the proposals.