The Financial Conduct Authority will have the power to publicise its intention to take enforcement action against firms or individuals.
A Treasury consultation paper on the new regulatory framework, published today, says the Government will legislate to allow the FCA to publicise its warning notices against firms and individuals and the grounds on which action is being taken.
The paper says: “The Government believes greater transparency as to what enforcement action is currently underway would increase the impact of the regulator’s enforcement work by highlighting potential issues to consumers at an early stage and signalling to firms what behaviours the regulator considers to be unacceptable.”
The FCA will have discretion over its use of the power because of the potential damage it may cause to firms and individuals.
At present the FSA issues a decision notice to the firm or individual who then has 28 days to refer it to the Upper Tribunual if they want to appeal. The action must then go through the appeal process and succeed before details are published.
If that option is not taken up the FSA publishes a final notice explaining what action has been taken against whom.
The Treasury says both the FCA and the Prudential Regulation Authority will have the power, although it expects the FCA to use it more often.
The Treasury says the power will offer a “credible deterrence strategy”.
But it is aware that there needs to be safeguards in publishing enforcement details ahead of final notices, given the reputational damage that could be caused.
To take account of this, the new power will include a safeguard to ensure “procedural fairness” for affected firms and individuals.
The regulator will have the discretion rather than a duty to disclose warning notices, and will have to consider the impact of any disclosure.
If intended enforcement action is publicised and subsequently abandoned, the regulator should publish a notice of discontinuance.