The Financial Conduct Authority (FCA) will now be publishing details of warning notices against firms and individuals before it issues enforcement proceedings against them. But in what circumstances will it name and shame individuals?
The regulator said it was aware of the adverse effects its new name and shame policy could have on firms and individuals and may in some circumstances opt to publish an anonymised warning notice instead.
The FCA received a number of industry comments during its consultation on the new transparency policy, which came into effect on Tuesday, which prompted it to re-think its blanket approach.
It also said it would in some cases consider whether to publish a warning notice at all, however in most cases it would be appropriate.
The FCA said:"We still believe it will normally be appropriate to publish details of a warning notice. We also expect it will normally be appropriate to identify a firm that is the subject of a warning notice, but not to identify an individual.
"After taking into account respondents' comments, we now consider that the potential harm caused to an individual from publication at this stage of the enforcement proceedings will normally exceed the benefits of early transparency, but this will not normally be the case for firms.
"However, we consider that there will be circumstances where it is appropriate to identify an individual."
The FCA said it will still identify individuals when
- it is not possible to describe the nature of our concerns without making it possible to identify the individual
- it is necessary to avoid other individuals being mistakenly believed to be the individual in breach
- it would help to protect consumers or investors
- it is necessary to maintain public confidence in the financial system or the market, or
- it is desirable to quash rumours in the market.
The FCA also said it will make it easier for individuals to demonstrate that they would be treated unfairly if their details are made public.
Individuals will still have to show that the publication of their names could have a "material effect" on them but the FCA will now consider this to be the case if there is a "significant loss of income" rather than a "disproportionate loss of income" as previously proposed.
The FCA will also consider "reputational damage" as being unfair, particularly "if the person also provides evidence of the harm that they would suffer as a consequence of the damage to their reputation".
The regulator will contact all firms and individuals prior to publicising a warning notice against them and take into consideration their responses before deciding which details to publish, it said.
