The Financial Conduct Authority plans to name firms under investigation at an earlier stage in a bid to increase transparency and deter wrongdoing.
The regulator outlined the new enforcement approach in a consultation paper published today (27 February).
It said this would mainly apply to firms rather than individuals due to legal constraints around privacy.
Therese Chambers, joint executive director of enforcement and market oversight, said: “We want to be more transparent about what we investigate, so firms will be reassured whether they are on the right track (and can pivot if they are not) and so that the public can be reassured that we are on the case.
“We want to drive our own accountability by shining a light on the efficiency and pace of our investigations. So, where it is in the public interest to do so, we propose to announce the opening of an investigation into a firm. We will also be upfront about our progress and about when we have had to close a case.
“We must also tackle the delay between misconduct occurring and penalty being imposed if we are to boost confidence in our markets. The longer it takes for outcomes to be determined or justice to be served, the longer it takes for us to send important signals to the markets we oversee about what we consider serious misconduct to be. We cannot control the whole timeline of justice, for example when a case goes to trial, but we can speed up our investigations and prioritise the cases that will have the most impact.”
Steve Smart, joint Executive Director Enforcement and Market Oversight added: “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.”
The FCA said any decision to announce an investigation would be taken on a case-by-case basis and depend on a variety of factors which will indicate whether to do so is in the public interest.
These include whether the announcement will protect and enhance the integrity of the UK financial system.
FCA said that announcing an investigation does not mean that it has decided whether there has been misconduct or breaches of its requirements. It added that investigations into individuals will be different and that it doesn’t usually announce these types of investigations.
The FCA consultation closes on 16 April.
Meanwhile, Chambers said the FCA has imposed fines of £41.5m since last April. She noted that the regulator will “prioritise compensation to consumers over fines where that is the right thing to do”.
FCA recently issued a fine of nearly £32,000 to a former director of London Capital & Finance, Floris Jakobus Huisamen, for signing off “misleading financial promotions”. He has been banned from working in financial services.
It secured the conviction of a former Goldman Sachs analyst, Mohammed Zina, who was found guilty of six offences of insider dealing and three offences of fraud.
It also secured the conviction of Guy Flintham, who defrauded 240 investors over a £19m investment scheme.
Guilty till proven innocent …
This is what naming and shaming effectively re-enforces.
This is typical propergander, positive self promotion for the regulator and negative, intimidation and humiliation for the regulated.
If the FCA want to be sooooo.. transparent then it needs to publishing full transcripts of its meetings, from the boardroom to one to ones, …word for word, blow by blow, and rational behind it decisions !!
I’m sure “we” would all like to know, what discussions actually took place, to how these fraudsters got away (getting away) with it for so long (many years) pilfering away millions, of consumer money.
FCA Proactive ? not so much …Reactive ? yes please !!
I believe this change is to be welcomed – but I would like to see the FCA reporting back to whistle-blowers confirming what action they have taken in response to information provided. Also to ensure whistle-blowers are listened to by people of calibre capable of listening and acting upon the concerns expressed. Call centres whose primary function is to make a note and get rid of the caller as quickly as possible are of no use. The FCA may well have improved in this regard already – and if so I would like to hear it.