Naming and shaming is a key strategy to prevent financial wrongdoing. The UK Financial Conduct Authority (FCA) is considering a controversial plan to “name and shame” companies under investigation. This proposal, aimed at enhancing transparency and deterring market misconduct, has sparked significant dissent from government officials and City executives, who argue it could harm London’s status as a global financial hub.
Introduced in a consultation paper in February, the FCA’s strategy is to disclose the identities of firms under investigation at an earlier stage. This move is part of an effort to bolster the regulator’s enforcement transparency and the preventive impact of its investigations. However, the proposal has met fierce opposition, with critics citing concerns over the potential reputational and financial harm to businesses. Approximately 65% of FCA investigations conclude without any action, further fueling the controversy.
According to a Financial Times report, Miles Celic, chief executive of TheCityUK, voiced the industry’s concerns, stating that prematurely naming firms contradicts the legal principle of ‘innocent until proven guilty’ and risks eroding trust in the financial sector. Celic highlighted the lengthy duration of FCA investigations, which average around four years.
The backlash extends to the political arena, where ministers have expressed reservations about the FCA’s approach. A senior government figure criticized the FCA’s decisions, suggesting they detract from the UK’s competitiveness. The Treasury has engaged with both the FCA and industry stakeholders to assess the proposal’s potential impacts on competitiveness.
Despite the backlash, the FCA believes that early disclosure of investigations could provide the public and regulated firms with better insights into the concerns under scrutiny. The consultation period has been extended until the end of April to gather further feedback, with FCA officials indicating a cautious approach to announcing investigations that might have an outsized impact.
