The Financial Conduct Authority (FCA) has scrapped its controversial plan to publicly name companies under investigation, citing a lack of consensus on the issue. The move follows pressure from businesses, government officials, and industry groups who argued that premature disclosures could unfairly damage company reputations.
Regulatory Transparency Plans Abandoned
The FCA initially proposed a public interest test to justify announcing investigations into regulated firms. However, after significant backlash—including from the former City Minister, Tulip Siddiq—the regulator revised its approach, offering companies a 10-day notice period before public disclosures. Despite this compromise, concerns remained, leading to the FCA’s decision to maintain its current policy of only announcing investigations in exceptional cases.
FCA Chief Executive Nikhil Rathi confirmed the decision, stating: “Considerable concerns remain about our proposal to change the way we publicise investigations into regulated firms, so we will stick to publicising in exceptional circumstances, as we do today.”
Government Push for Deregulation and Investment Growth
The reversal comes as the UK government pressures regulators to reduce bureaucracy and encourage investment as part of its economic growth agenda. Ministers have emphasized that excessive regulatory hurdles can discourage business confidence and limit market expansion.
The FCA had initially pursued greater transparency following criticism over its handling of the British Steel pension scandal, where financial advisers provided flawed advice to pensioners. The watchdog argued that earlier disclosures could have prevented consumer harm. However, businesses and government officials feared that naming firms before proven wrongdoing could lead to unjustified reputational damage.
Financial Regulations Under Review
The decision to drop the “name and shame” policy aligns with a broader government effort to streamline financial regulations. As part of an efficiency drive, the government has announced the abolition of the Payment Systems Regulator (PSR), which will be absorbed by the FCA along with its 160 staff members.
Meanwhile, the FCA and the Prudential Regulation Authority (PRA)—its counterpart at the Bank of England—have halted work on diversity and inclusion regulations. While some critics view this as part of a wider pushback against diversity initiatives, the FCA insists the move is aimed at avoiding duplication and aligning with new government legislation on workers’ rights.
Future of Financial Sector Oversight
The House of Lords committee recently warned that premature enforcement announcements could harm firms that never actually face regulatory penalties. The committee is also reviewing how regulatory changes impact the financial services sector, with some members having ties to major City firms.
Despite dropping the name and shame policy, the FCA remains committed to tackling non-financial misconduct, including allegations of bullying, harassment, and discrimination within the financial sector. Rathi reiterated that market integrity depends on strong enforcement measures, with final policies expected to be published in June.
