The Financial Conduct Authority’s powers to publicise early warning notices will treat firms and individuals like “would-be criminals”, says City of London Conservative MP Mark Field.
The Financial Services Bill will give the FCA the power to publicise the details of firms and individuals it is investigating at the warning notice stage. The bill also reduces the number of days a firm has to make representations to the regulatory decisions committee from 28 days to 14.
In a debate on the bill in the House of Commons this week, former Shadow Treasury minister Field warned the proposals could cause firms and individuals reputational damage before they have a chance to defend themselves.
He said: “The argument in favour of the change is that this is similar to a criminal case but that misses the important difference between the cases and represents a worrying trend in the thinking, to the effect that everyone in the industry is somehow a would-be criminal. The reality is that, essentially, the Daily Mail test means that all the damage to the firm’s reputation will be done before any due process has been followed.”
The Government rejected the FSA’s calls to scrap the requirement for the FCA to consult firms and individuals before publicising details of ongoing enforcement investigations.
Guidance published alongside the bill last month says: “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.”
Axxis Financial Planning director Owen Wintersgill says: “The FCA’s power should only be used if there is a risk of consumer detriment. If there is not, dancing on a firm’s reputation before a proper investigation would seem premature.”