The head of the Financial Conduct Authority (FCA) has been summoned to parliament to explain why work on the regulator’s ‘naming and shaming’ proposal has not been halted.
To serve as a deterrent, Britain’s financial watchdog recently proposed announcing the names of the firms it is investigating – marking a sharp deviation from current protocol, which is to name a firm once an investigation has concluded.
The House of Lord’s financial services regulation committee responded by asking Nikhil Rathi, FCA’s CEO, to pause work on the plans, over fears they may tarnish the reputation of firms that are found to be licit.
Last Friday the FCA set out a detailed 29-page defence of its ‘naming and shaming’ plan, asserting its intention to continue working on it.
The committee’s chair, Michael Forsyth, said in a letter to Rathi: “The FCA’s response failed to directly address concerns and did not commit to pausing implementation until after our committee had properly scrutinised its proposal.”
As such, the committee is launching an inquiry, with Rathi being invited to appear before parliament. The FCA has made no comment.
In a rare public intervention, Jeremy Hunt, Britain’s Finance Minister, has advised the FCA to reconsider. The Labour Party has noted that the financial watchdog should take into account responses from its public consultation and the sector’s views on the proposals.
