Amidst political scrutiny into its operations and effectiveness, the Financial Conduct Authority (FCA) has published the second phase of a consultation into its transparency.
The UK financial services regulator observed that ‘significant concerns’ were raised during the first phase of the consultation, which focused on proposals it has made to enhance transparency in its enforcement investigations. The regulator also stated that it hopes to assist the parliamentary scrutiny of two of its committees.
In response to consultation feedback, the FCA has proposed four changes to its proposals around transparency, one of which is that the regulator will not announce investigations which begin before the changes in policy come into effect.
Firstly, the potential negative impact on a firm as a result of an FCA investigation will be considered part of the public interest. Companies will also be given 10 days notice ahead of an enforcement investigation announcement being made, rather than one day, and firms can make representations during this time period.
The public interest test has been altered, with the addition of factoring in the potential for an announcement to disrupt public confidence in the UK’s financial services sector – which the government is keen to encourage innovation within and draw overseas investment to.
Steve Smart, Joint Executive Director of Enforcement and Market Oversight, 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.”
The FCA’s announcement came shortly after it was heavily criticised by the All-Party Parliamentary Group (APPG) on Investment Fraud and Fairer Financial Services. The regulator’s workplace culture was particularly criticised, along with its ability to promptly handle enquiries from consumers and companies.
When announcing the changes to its proposals, the FCA expressed confidence on the efficiency of its investigations, citing data. The regulator states that data shows ‘the pace of investigations accelerating, including a number of investigations which took 16 months or less’.
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.”
