The FSA board is considering what process the Financial Conduct Authority should follow when using its new power to publish early warning notices.
Under the Financial Services Act 2012, the FCA has been given the power to publish early warning notices when it starts to investigate a firm or individual for enforcement action.
Many in the industry have expressed concerns that early warning notices could cause irrepairable reputational damage to firms or individuals who have not been found guilty of any wrongdoing.
In the FSA’s December board minutes, published last week, the regulator says the power should be used in a way that is “fair” and “proportionate”.
It says it will consult on the new powers and outline more detail at its next board meeting.
The minutes state: “The board discussed several factors that might be taken into account when determining the appropriate policy, including how to judge fairness (and whether it was possible or desirable to articulate these in detail given the huge range of circumstances that would be covered), issues of transparency and consumer protection and the balance of fairness and proportionality between individuals and between individuals and firms if an individual’s livelihood was at stake.”
Hudson Green & Associates Ian Hudson says: “The FSA will want to demonstrate checks and balances and show a proportional response. The only way you can respect the regulator is to be on an equal professional footing with it.”