The financial watchdog has launched a response amid growing pressure from the city and ministers to abandon plans to name and shame companies it is investigating.
The Financial Conduct Authority (FCA) used a newspaper article to defend the proposals, even as the industry stepped up its opposition through a letter urging Jeremy Hunt to intervene.
At stake are plans set out in February that would see the regulator abandon its policy of not naming companies it is investigating except in exceptional circumstances.
Instead, I would decide whether to do so on a case-by-case basis depending on whether it is in the public interest. A consultation on the plans closes today.
They have provoked a backlash from the sector – which argues they will damage the UK’s competitiveness – and come at a time when ministers are increasingly frustrated by the FCA’s approach.
‘Name and shame’: Financial Conduct Authority wants to abandon its policy of not naming companies it is investigating except in exceptional circumstances
And it is understood that the Chancellor would not support what he considers a “disproportionate regulatory environment”.
But in an article for City AM, FCA joint enforcement directors Therese Chambers and Steve Smart rejected the criticism.
They said there was no plan to name companies in every investigation and that there was no question of “seeking to embarrass” the companies.
The article said: “It is about highlighting a case in a way that deters others, raises standards, reassures clients, counters unfounded speculation or encourages people to come forward with evidence and intelligence.”
Analyzes of companies investigated in the past had shown that there was little impact on their stock prices when investigations were made public, Chambers and Smart added.
And they rejected the argument that they were damaging the UK’s global appeal.
“Companies want to reach a jurisdiction where they know the rules will be enforced, integrity will be maintained, bad actors will be challenged, and a level playing field will be established,” regulators said.
But the scale of the opposition was underlined in a letter to the Chancellor from 16 trade associations, including the UK Finance and Investment Association. It said: “There is currently no other G7 country taking the enforcement approach proposed by the FCA.”
City Minister Bim Afolami said: “We are engaging with both the FCA and the industry as the proposals are developed.”