The UK’s financial watchdog has agreed to water down proposals to “name and shame” firms it is investigating, after facing pressure from the City.
The Financial Conduct Authority (FCA) said it is making changes, having “heard the strength of feedback” on its original plans.
Firms will now be given 10 days’ notice before any announcement is made, rather than the one day previously suggested.
The FCA will also consider whether publicising an investigation has a “potential negative impact” on the firm in question.
The proposals, unveiled earlier this year, involved the regulator announcing when it has opened enforcement investigations into financial firms, which it currently only does in very limited cases.
It would mean “naming and shaming” the companies being probed, regardless of whether or not it decides there has been misconduct or a breach of rules.
The move prompted a widespread backlash earlier this year, including from former chancellor Jeremy Hunt, who warned the watchdog to reconsider its plans over fears it could damage the UK’s standing internationally.
We have heard the strength of feedback to our original proposals, and we are making changes as a result
Therese Chambers, Financial Conduct Authority
Several trade bodies, including the City of London Corporation and Pimfa (the Personal Investment Management & Financial Advice Association), also raised concerns that making investigations public could have a damaging effect on firms, their staff and customers, before any conclusions are reached.
The FCA said the revised proposals will see a very small number of additional investigations into regulated firms being announced.
That is partly because it will now have to consider whether publishing details would have a serious market impact, cause financial instability, or affect public confidence in the financial system.
It will also consider whether it would have a negative effect on the firm’s staff, its customers and investors.
The longer notice period will give companies more time to consider making their own announcement in response, the FCA added.
Therese Chambers, joint executive director of enforcement and market oversight, said: “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.”