Last week I submitted UK Finance’s response to the Financial Conduct Authority’s (FCA) ‘name and shame’ consultation paper CP 24/2, Part 2 on behalf of members. It proposes to announce publicly that it has opened an investigation into a firm rather than waiting until it has concluded its investigations, as it does now.

The CP is the follow up to a 2024 consultation on the same topic which we vehemently opposed. Despite some amelioration of its original proposals we still remain vehemently opposed to them. 

We observed that the proposals fly in the face of the presumed innocent until proved guilty principle and that they have been made in the year which sees the 800^th anniversary of the last signing of the Magna Carta, which first introduced the presumption of innocence.

In exceptional circumstances the FCA already has the ability to announce that it has commenced an investigation, negating the need for the over-engineered ‘public interest factor’ test the FCA proposes to apply in assessing if a public announcement should be made.

We emphasised the potentially severe and enduring impact of an announcement on a firm’s reputation, particularly in a world where ‘influencers’ and users of social media are ‘unmoored’ from time and space.

At the moment, about two thirds of investigations started by the FCA result in no finding of wrongdoing. We were dubious that most social media users would even even notice an announcement of the conclusion of an investigation that did not result in further action being taken. And even if they did, such an announcement might be actively disbelieved, on the assumption that ‘there is no smoke without fire’.

We also said that that the FCA's proposals would make it an international outlier. No other financial services regulator anywhere in the world has adopted the same approach as it is proposing, which could dissuade overseas firms from establishing in the UK.

So given the very significant reputational and financial damage the announcement of an instigation could cause, as well as the impacts on growth and competition in the UK we strongly recommend that the FCA’s proposals should be abandoned in its entirety.