Advisers have welcomed the FCA’s decision to tone down its approach to publishing early warning notices after industry concern.
The regulator this week set out its final rules on publishing early warning notices for those subject to ongoing enforcement action.
The FCA issued a consultation paper in March discussing how it would use its new powers to publish details of ongoing investigations at an earlier stage. The industry raised concerns that the powers created a “guilty until proven innocent” mentality and would lead to irreparable reputational damage.
The regulator now says it will typically identify firms in warning notices, but not individuals, though individuals could still be identified in some circumstances.
The FCA will consider publishing anonymised warning notices where appropriate, and is lowering the threshold that a person has to meet to demonstrate that publication of a notice would be unfair. It says small firms are likely to find it easier to demonstrate unfairness than large ones.
It will also publish discontinuation notices and may issue a press release where cases have been droppe but it will not explain why proceedings have been discontinued.
Apfa director general Chris Hannant says: “We are pleased the regulator has listened to our concerns, particularly around how a person’s reputation would be restored if a notice later proved to be misplaced . Where someone is found to not be at fault, this should be made equally as clear as the original notice.”
Evolve Financial Planning director Jason Witcombe says: “It is positive to see the FCA has listened to the industry. An adviser’s reputation is crucial to their business.”
But Highclere Financial Services partner Alan Lakey says discontinuation notices should explain why regulatory action has been stopped. He says: “It should be clear why a case has been dropped and whether this is because someone has been found innocent or whether it was simply due to a lack of evidence.”