British regulators said Tuesday that they are to start announcing when firms are under investigation and facing possible enforcement action, not waiting until they reach a conclusion in a case before singling them out, which has been the traditional approach.
The UK’s Financial Conduct Authority (FCA) confirmed Tuesday that it will use its new power to publish information about proposed enforcement action. Previously, the regulator could only publish information about enforcement proceedings once its tribunal had reached a decision, or after the period to refer a case to the tribunal had expired.
Now, the FCA says that information will be made public through a warning notice statement that will usually name the firm under investigation and, in certain circumstances, name an individual. “Publishing these details will support the FCA’s objectives of consumer protection and protecting and enhancing the integrity of the UK’s financial system,” it says. “It will make clear to consumers, firms and investors the sort of behaviour considered unacceptable by the FCA and will make the enforcement process more transparent.”
“It is clear that the more transparent and open that we can make the regulatory process, the more confidence we can give people that we are acting in their best interest,” said FCA director of enforcement, Tracey McDermott.
“The FCA will consider the circumstances of each case in deciding whether it is appropriate to publish details of the warning notice and, if so, what details to publish. Before making its final decision, it will consult the person under investigation and will take into account any evidence that publication would be unfair,” McDermott said.
The UK’s Financial Services Consumer Panel welcomed the FCA’s proposals, noting that it has called for greater transparency for years. “Consumers need to be given information at the earliest opportunity so they can make informed decisions about which firms to do business with. Knowing that a firm is being investigated for misconduct is an important part of this,” said Sue Lewis, chair of the Consumer Panel.
“The new financial services regulator is demonstrating that it is true to its word, and is not bowing to the demands of the industry to be treated more favourably than other industries. The cultural change of the new regulator is starting to manifest itself in stronger consumer protection, and we look forward to seeing the FCA using its powers,” she added.