The Financial Conduct Authority (FCA) has proposed to give firms 10 days’ notice to make representations before an investigation is announced, longer than the one day currently being consulted on.
The regulator announced this in the second phase of consultation on giving more transparency around investigations.
It also suggested giving firms an extra two days’ notice once representations have been made and the FCA decides to publish its announcement.
The regulator said: “The new proposed period will also give firms time to consider whether they want, or are required, to make an announcement themselves or make representations that they should be able to do so; for example, on a timetable aligned with their wider financial announcements.”
It has also proposed to “explicitly” consider the negative impact on a firm as part of the public interest test, as well as the potential an announcement has to “seriously disrupt” public confidence in the financial system or market.
Additionally, the FCA will not announce investigations that began before any policy changes come into effect, although it might reactively confirm investigations already in the public domain where there is public interest.
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If these proposals are implemented, it would only lead to additional proactive announcements of investigations into regulated firms “in a very small number of cases”, the regulator said.
Its board will decide on these proposals in the first quarter of 2025. This comes after the House of Lords Financial Services Regulation Committee launched an inquiry into the FCA’s plans to name and shame firms under investigation.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “We have made good progress in increasing the focus and pace of our enforcement work – so that we can prioritise the investigations most likely to drive meaningful deterrence across industry and deliver more timely outcomes. We want to hear further views on whether some increased transparency could work in practice.”
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, added: “We have heard the strength of feedback to our original proposals, and we are making changes as a result. We hope the greater detail published today supports the further engagement we hope to have on the proposals, before we make any final decisions.”
