Financial services lawyers have labelled the FSA “irresponsible” and “unaccountable” as it looks to toughen up new powers on publicising ongoing enforcement action.
The draft financial services bill, published in June, allows the Financial Conduct Authority to publicise warning notices against firms and individuals but requires the FCA to notify the subject of the warning notice beforehand.
The FSA has called for this requirement to be removed to avoid lengthy legal battles to stop information becoming public.
Pinsent Masons head of the financial services regulatory team Tim Dolan says: “If the FSA is sufficiently concerned about breaches to its rules, it can ask the regulatory decisions committee to urgently cancel the compan y’s regulated permissions.
“Why does it want to routinely publicise investigating firms? It seems to me the harm outweighs the good.”
Beachcroft partner Matthew Rutter says: “This is very worrying. There is no real recognition of the need to strike a balance between effective regulatory powers and the rights of those who are regulated.
“It is not a particularly sensible or responsible way for the FSA to regulate.”
4 Pump Court barrister Peter Hamilton says: “Firms will have no redress against the FCA if it gets the matter wrong. Further, the FCA will not be subject to adequate oversight and accountability in relation to the exercise of this power.”
Hamilton believes that the regulator should be liable for any damage it causes a firm’s business through publishing notices of investigations that are later dropped or the publication of inaccurate facts.
The FSA declined to comment.