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New regulator outlines plans to name and shame offenders
by Daniel Grote on Mar 19, 2013 at 08:09
New regulator the Financial Conduct Authority (FCA) has outlined how it plans to use its new power to publish warnings about firms it is planning to censure, fine and suspend.
The FCA has been granted greater powers than the regulator it replaces, the Financial Services Authority (FSA), to disclose its work around enforcement actions.
The FSA is only allowed to publish information over the proceedings once the firm in question had made representations to the Regulatory Decisions Committee, in the form of a decision notice. However, the government has handed the FCA the power to publish more limited information at an earlier stage.
The regulator said in a consultation paper on the new powers: 'Our proposed policy is that the FCA will normally publish a statement where it has issued a warning notice to which the power applies. However, the FCA must not publish a statement if publication would be unfair to the person to whom the notice relates, prejudicial to the interests of consumers or detrimental to the stability of the UK financial system.'
It said it would consider the extent to which subjects of an investigation had been made aware of the case against them, and that warning notices would only be issued after enforcement investigations 'which may have taken months or, in some cases, over a year'.
It said the notice would contain 'sufficient information to identify the firm or individual which subject to the enforcement action as well as sufficient information to enable consumers, firms and market users to understand the nature of the FCA's concerns'. The notice would not contain details of the sanction proposed.
For notices not to be published the subject would need to prove publication 'could materially affect their health, result in a disproportionate loss of income or livelihood, prejudice criminal proceedings to which they are party or give rise to some other equal degree of harm'.
It gave an example of a small IFA firm, where the regulator intends to publish a warning notice over its sale of high-risk investment products. It said it would not publish if the firm was able to argue publication would lead to a loss of custom that would spark bankruptcy or insolvency.
It added that notices would make clear the final decision of the FCA had not yet been taken, and that the subject of the notice had the right to make representations to the RDC. Where the notice is not followed by further action, the FCA said it would make clear on its website that the warning no longer applied.
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