The UK financial watchdog succumbed to years of pressure and frequently dumped the companies they were investigating into “name and embarrassment” companies.
The Financial Conduct Authority (FCA) has decided not to proceed with not applying a new public interest test to announce a survey of regulated companies “in light of consensus” on the plan.
The decision is as governments are putting pressure on regulators to “tear the bureaucracy that blocks investment” as part of their growth agenda.
Critics opposed the FCA’s plan to be more transparent with the public and whistleblowers when investigating potential misconduct in the city.
The FCA has already been watered down by the proposal first announced earlier last year after protests from businesses and criticism from then-city minister Tulip Siddiq. The revised plan would have given businesses 10 days of notice before the public announcement was made.
Siddiq publicly called on regulators to reconsider its plans and suggested that if they pushed it by disclosing the companies they investigated, it could be reversed.
Nikhil Rathi, CEO of FCA, said: “There remains considerable concern about the proposal to change the way investigations are published with regulated companies, and as it is today, it will be published in exceptional circumstances.”
He said it is impossible to move forward with naming companies and embarrassment without consensus.
The protest partial urge for naming and embarrassment companies was partly spurred as the FCA failed to release the names of financial advisors who gave defective advice to British Steel pensioners. The FCA alleged that previous disclosures of the investigation could prevent some pensioners from being harmed.
“We will implement changes that we believe will help us to order broader support and support our efforts to protect our consumers from harm,” Lati said.
He said there was a wider conversation about the regulations the public, government and businesses wanted. “What we need to have is a proper argument,” he said.
He added that every step towards deregulation needs to consider tolerance for outcomes.
The government will abolish the Payment Systems Regulator (PSR) as part of its “efficient drive,” and the FCA will absorb it and its 160 staff. The government has presented this step as part of its efforts to boost UK economic growth.
The FCA and PSR share the facility in Stratford, eastern London. PSR staff have an FCA contract.
Sign up for Today’s business
Get a set of workdays – Point out all the business news and analysis you need every morning
Privacy Notice: Newsletters may contain information about charities, online advertising, and content funded by external parties. For more information, please refer to our Privacy Policy. We use Google Recaptcha to protect our website and the application of Google Privacy Policy and Terms of Use.
After the newsletter promotion
Separately, the Guardian reports on how peers linked to metropolitan companies sit on a new lords’ committee that scrutinizes regulations in the financial services industry.
The Senate committee warned in February that it could release an enforcement investigation early without addressing concerns about the plan.
Meanwhile, the FCA of the Bank of England, a Prudential regulator, and its sister organization, has stopped working on rules to improve diversity and inclusion, Watchdog confirmed.
Rathi rejected the proposal, part of a US-led trend to kill diversity initiatives, and instead pointed to new government laws on workers’ rights.
He said it is necessary to avoid “duplicate” in the area and ensure that FCA rules are in line with the law. Regulators monitor the enforcement of employers’ responsibility to protect staff from harassment. This would inform work on bullying, sexual harassment and depriving the tighter boundaries of allegations of discrimination against financial professionals and businesses, he added.
The FCA, which is set to release its final policy in June, remains “committed” to investigate non-financial fraud and considered it essential to “market integrity,” Rathi said.
