UK insurers welcome FCA decision to end "name and shame" plans

By Rebecca Delaney

March 12 - (The Insurer) - UK industry bodies have welcomed the move by the Financial Conduct Authority to scrap its "name and shame" proposals to publish details of firms that are subject to ongoing regulatory investigations.

The FCA confirmed in an update on Wednesday that it will not advance with its proposals, originally revealed in a consultation in February last year, to shift from an exceptional circumstances model to a "public interest test" by announcing investigations into regulated firms before they reach conclusion.

Nikhil Rathi, CEO of the FCA, said: "Considerable concerns remain about our proposal to change the way we publicise investigations into regulated firms, so we will stick to publicising in exceptional circumstances as we do today. We will implement changes which have commanded wider support and which we believe will help support our efforts to protect consumers from harm."

The decision was welcomed by the International Underwriting Association, which had previously voiced criticism of the proposals on the grounds that making publicly available the details of ongoing enquiries into alleged misconduct could lead to market speculation, reputational damage and financial hardship, even if firms are subsequently found to be innocent.

Last month, the cross-party House of Lords Financial Services Regulation Committee labelled the watchdog’s plans as an "abject failure" in the most recent public criticism lobbied against the proposals.

"It is good news that the test for publicising investigations will not be altered. We believe that the FCA already has the powers it requires to effectively carry out enforcement action," said Helen Dalziel, director of public policy at the IUA.

Dalziel added that the decision not to go ahead with a public interest test means there is less likelihood of negative publicity creating a prejudicial environment in which guilt is presumed.

"The concept of ‘innocent until proven guilty’ is a fundamental doctrine of criminal law and the mere association with an ongoing investigation could cause substantial harm to a firm’s standing in the market," she continued.

"Many investigations do not actually lead to any enforcement action and so publicising them prematurely would only have eroded, rather than encouraged, trust and confidence in financial services."

The decision was also "extremely welcomed" by the Association of British Insurers.

"We've consistently stressed that this would have had detrimental impacts on consumers, firms, and the reputation of the UK’s regulatory system, so we fully support its decision to drop this approach," said Hannah Gurga, ABI director general.

"We're also pleased to see that its latest proposals are in line with our call for a continuation of its current process, with a small number of additional powers to address specific gaps."

The FCA's statement added that there is support for proposals to reactively confirm investigations already in the public domain, as well as the publication of greater detail of issues under investigation on an anonymous basis.

It said there is also support for public notifications focusing on the potentially unlawful activities of unregulated firms and regulated firms operating outside the regulatory perimeter.

The FCA is due to publish its final policy by the end of June.