Conservative peer Lord Howard Flight has slammed Government concessions over early warning notices as “pathetic” and says he expects more.
Under current proposals in the Financial Services bill, the FCA will be allowed to publish notices of firms under investigation for enforcement action.
In the House of Lords debate on Monday, the Government proposed an amendment allowing it to retain the power to repeal early warning notices if it is not used responsibly by regulators.
Flight argues the publication of such notices could lead to “lynch-mob” justice and have an unfairly damaging impact on the reputation of a firm and its management if no further action is taken.
He said: “We will definitely be re-raising the issue of early warning notices at report stage. There was a little bit of give from the Treasury by agreeing to provide the regulators with a fair system of judicial review, even if it is not through the Regulatory Decisions Committee.
“It is pretty pathetic but at least there is a realisation of the point. My understanding is that some Treasury ministers take my point so there will be a bit of give.”
Aifa policy director Chris Hannant says: “An option to repeal the powers doesn’t really address the potential harm that can be done to a company. It doesn’t address the problem of mistakes being made and people having their reputations unfairly damaged.
“If it is wrong the regulator has to be clear it has made a mistake. We have suggested that it has an obligation to publicise its errors if they have wrongly raises the alarm.”
The FSA has called for the Government to go further than early warning notices and allow it to suspend individuals who are under investigation.