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Is FCA move to name & shame firms just a publicity stunt?
by Danielle Levy on Oct 15, 2013 at 11:31
(Update) The Financial Conduct Authority's (FCA) decision to name individuals and companies ahead of enforcement action has been branded a publicity stunt by law firm Cameron McKenna (CMS).
Under new rules, the regulator is seeking to take a more proactive approach to enforcement action by utilising a new power to publicise warning notices.
Previously, the regulator could only publish information about enforcement proceedings at a later stage in the enforcement process, once it had decided to take action.Following a period of consultation, the FCA said that information would be made public through a warning notice statement that will usually name the firm under investigation and, in certain circumstances, name an individual.
The City watchdog said publishing these details would support the FCA’s objectives of consumer protection and make clear to consumers, firms and investors the sort of behaviour considered unacceptable by the FCA and will make the enforcement process more transparent.
Director of enforcement, Tracey McDermott said: 'I believe we have got the balance right so we now have in place a regime that enables us to provide information to consumers, investors and firms earlier about the action we are taking to tackle misconduct to ensure markets work well and consumers get a fair deal.
'It is clear that the more transparent and open that we can make the regulatory process, the more confidence we can give people that we are acting in their best interest.'
However, Simon Morris, a partner at CMS takes a different view. In the wake of the news describing the naming of individuals as 'grossly unfair' without appropriate evidence.
He commented: 'This move is calculated to gain publicity. The FCA does not need to name individuals to publicise what it is doing to tackle misconduct but knows that the crowd only gathers when there is a body in the stocks.
'Publicly naming individuals whom it charges with misconduct at the beginning, rather than the end, of a case makes the FCA look tough, gets headlines and frightens everyone else. This step is grossly unfair to an affected individual.
'It publicises an allegation of wrongdoing before the FCA has heard any evidence or makes an actual determination. The individual has no equal opportunity of response to set out his or her position. It is difficult to see how he or she can continue in their job after the FCA makes such a damaging announcement.'
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