Early warning poses double jeopardy risk
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Proposed powers for the Financial Conduct Authority to publicise intended enforcement action risk exposing firms to “double jeopardy”, according to the Association of British Insurers.
The Treasury paper on the new regulatory framework calls for the FCA should be able to publicise warning notices about firms and individuals, which signal the start of formal enforcement proceedings, before those involved can argue their case.
In its response, the ABI says: “There is a risk that a publicised warning notice might trigger civil litigation against a firm thereby exposing the firm to ’double jeopardy’, with the firm having to defend itself in two separate actions.”
The ABI says publication of warning notices could cause reputational damage for the regulator as well as the individual or company involved if the firm is subsequently vindicated.
It adds: “The regulator should be required to publish guid- ance as to when it is likely to consider publicising enforcement action so that firms would have a proper opportunity to challenge the allegation before it is applied and publicised.”
P3 Wealth Management managing director Frank O’Donnell says: “If there is a suggestion of fraud, then the regulator sho- uld publicise it but it should not make public trivial concerns over procedure.”
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