The Investing and Saving Alliance (TISA) Warns of ‘Unintended Consequences’ of FCA’s ‘Name and Shame’ Proposals
In its submission to the Financial Conduct Authority’s (FCA) consultation on ‘Greater Transparency of our Enforcement Investigations’ (CP24/2: Part 2)’, TISA urges ‘caution’ as the FCA looks to shift from an “exceptional circumstances” test to a “public interest” test as part of its work to increase transparency and deter other organisations from misconduct.
TISA outlines several concerns which arise from the potential move from “exceptional circumstances” to “public interest”, including the increased susceptibility to external pressures on the FCA’s decision making process, such as public outrage and political influence. In particular, TISA challenges the FCA’s rationale that the change would improve accountability to relevant Parliamentary committees. TISA’s view is that there are already established, and more appropriate, parliamentary powers and procedures available should Parliament require the FCA to disclose on specific matters.
Spokesperson for TISA, Lisa Laybourn commented:
“We will always support actions which reduce consumer harm. However, we are concerned that there may be significant unintended consequences resulting from shifting to a “public interest” test in relation to disclosure around FCA investigations. This move could introduce unfairness and external pressures into the process, cause reputational damage to firms and employees, and reduce the competitiveness of the UK as a destination for financial service investment. Crucially, there is a risk that consumers may be adversely affected as they may make judgments and decisions in reaction to a ‘naming’ before the investigation has been concluded and any follow actions decided.
Rather than rewriting the entire process, we believe that the FCA should use the tools already in its arsenal to protect consumers, hold firms to account and ensure the UK remains competitive on the global stage.
Reviewing the current interpretation of the ‘exceptional circumstances’ test and making smaller changes to enforcement guidance would allow for a more balanced approach, both protecting consumers and mitigating risks to the financial service market.”
For press enquiries, please contact tisa@tendoconsulting.co.uk