The FSA has defended proposals to give the Financial Conduct Authority the power to publish warning notices against firms and individuals.
At present, the FSA can only publish details of an investigation once it reaches final notice stage.
Giving evidence to the Treasury select committee this week, FSA conduct of business unit interim managing director Margaret Cole (pictured) said the warning notice stage is a reasonable time to publicise investigations.
She said: “It is the moment when we have looked at the case in detail, taken it to an internal committee and reached a conclusion that there is a case to answer.
“By publishing brief information at that moment, we are not doing anything more than bringing it into alignment with the criminal and civil processes and that of other regulators.”
Financial services lawyers and Aifa warn the proposals mark a worrying shift towards a “guilty until proven innocent” stance. Last month, Complaints Commissioner Sir Anthony Holland also raised his concerns with MPs.
In 2009/10, 35 of 114 enforcement cases were dropped after the warning notice stage.
The draft Financial Services Bill currently requires the FCA to consult with firms prior to publishing warning notices. In September, the FSA called for the requirement to be scrapped.
Cole said: “In each case, there will be an argument and satellite litigation over whether we can publish the warning notice. We do not want to get into satellite litigation, so the full current proposal is not satisfactory.”