The Financial Conduct Authority (FCA) has recently announced that it will not proceed with its proposal to publicly name firms under investigation. This decision comes after significant opposition from industry stakeholders and the government, who raised concerns about the potential damage to company reputations and the stability of financial markets.
What was the proposal?
The original proposal aimed to increase transparency by disclosing the names of firms under investigation. The goal was to enhance public trust and accountability within the financial services sector. However, this approach faced backlash due to the risk of premature reputational harm and the potential for market disruption.
Why the u-turn?
Following feedback from industry leaders and policymakers, the FCA acknowledged that publicly naming firms before any wrongdoing is confirmed could lead to unfair consequences. The concern was that such disclosures could negatively impact businesses that are ultimately found to be compliant, leading to unnecessary financial and reputational damage.
Additionally, the government’s push to “rip out bureaucracy that blocks investment” played a role in the decision. Critics argued that the proposal would discourage investment and harm the UK’s financial market competitiveness. The FCA also faced pressure from then-City Minister Tulip Siddiq, who publicly urged the regulator to reconsider and even suggested she could overrule the decision.
What does this mean for compliance?
- Preserving market stability: By maintaining confidentiality during investigations, the FCA aims to prevent market panic and ensure fair treatment of firms.
- Focus on internal improvements: Firms can concentrate on addressing compliance issues without the added pressure of public scrutiny.
- Enhanced communication with regulators: The FCA’s decision highlights the importance of open dialogue between regulators and firms to address compliance concerns effectively.
- A shift in regulatory strategy: The FCA will now focus on implementing changes that have broader support and are more effective in protecting consumers from harm, such as learning from past cases like the British Steel pension scandal.
Moving forward
While the FCA has stepped back from public disclosures, it remains committed to holding firms accountable for regulatory breaches. By prioritising compliance and working closely with regulators, businesses can navigate the evolving regulatory landscape with confidence.
For those seeking to enhance their compliance strategies, regular audits, comprehensive training programmes, and engagement with independent compliance experts are key steps to ensure adherence to regulatory requirements.
How Neopay can help
Neopay specialises in supporting businesses within the e-money and payments sector to maintain compliance with regulatory requirements. From conducting thorough audits to delivering engaging training programmes, our tailored solutions help firms stay ahead of regulatory changes and build robust compliance frameworks. If you would like to discuss how Neopay can support your compliance strategy, get in touch with us today.
