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Enforcement plea rejected

The Government has rejected the FSA’s calls to scrap the requirement for the Financial Conduct Authority to consult firms and individuals before publicising details of ongoing enforcement investigations.

The Treasury last week published the Financial Services Bill, which sets out the rules governing the regulatory structure of the Prudential Regulation Authority and the FCA.

One of the new powers to be granted to the FCA is the ability to publicise enforcement investigations at the earlier warning notice stage rather than publishing details once the investigation is completed, as is currently the case.

The draft bill required the new regulator to consult firms and individuals involved before making the investigation public. The FSA wanted this requirement removed, arguing that many would look to block publication through the courts.

A joint committee of MPs and Lords recommended the Government removes the requirement to consult in a report last month. However, the Government says the right balance has been struck between “making the power usable and providing appropriate safeguards for those affected”.

Guidance published alongside the bill states: “The Government notes the requirement to consult does not mean the regulator must seek the consent of the firm or individual in question but considers that pre-disclosure dialogue is crucial to allow the regulator to determine whether disclosure is appropriate in the circumstances.”

To speed up the disciplinary process, the Government also wants to halve the time that firms and individuals have to make oral or written representations before a decision notice is published from 28 days to 14 days.

Paladin Financial Services managing director Tim Purdon says: “We need to see a clear danger to the consumer before the regulator names and shames people.”


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