Millions of UK consumers are in the dark about a mystery company which is being investigated by the City watchdog because of rules preventing its name from being mentioned, MPs were told yesterday.
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), revealed that the investigation was underway and defended proposals to lift the veil of secrecy.
Rathi is at war with ministers, including Chancellor Jeremy Hunt, and the financial sector over plans to make it easier for the FCA to name firms it is investigating.
His comments came hours after City Minister Bim Afolami attacked the “naming and shaming” method and a plan to impose equality quotas.
“Regulators need to… stop doing things like this,” Afolami said at a conference.
Secret investigation: FCA chief executive Nikhil Rathi (pictured) is at war with ministers and the financial sector over plans to make it easier for the FCA to name companies it is investigating.
Rathi defended naming and shaming amid suggestions from Treasury select committee MPs that it was “madness” and damaging the UK’s global competitiveness.
He talked about a long investigation about a company.
Rathi said: ‘That’s the kind of case where we might think we would want to confirm that an investigation is taking place.
The concern would be that there are several million consumers using this company. We are investigating it and have had conversations with this company for three years.’
Rathi said the case did not meet the threshold for naming, which can only be done in “exceptional circumstances”.
The FCA would change this to be able to identify the firms it is investigating.
Rathi said victims of the British Steel Pension Scheme scandal were lost due to secrecy.
“We had information about problematic financial advisers and they were being investigated,” he told MPs.
‘The steelworkers at Port Talbot didn’t know we were investigating; They were calling our contact center.
‘The only thing they obtained was the information that this company was in the registry, nothing else was revealed. “Then they followed advice and potentially lost their life savings.”
Rathi said the FCA would review the reaction to its plans. FCA chairman Ashley Alder said: “We did not expect such a severe reaction.”
A coalition of 16 trade associations has written to Hunt to oppose it. He has urged a rethink.
Afolami, speaking at an FT cryptocurrency summit, said the FCA should “stop focusing on things that are not essential, like naming and shaming or this diversity consultation, and focus on conduct and making sure the system works” .
He added: “It is perfectly legitimate for the Chancellor or anyone else to say that we would like them to think again.”