City of London Firms Strategise Rebellion Against the FCA

April 21, 2024

City firms are unhappy with the Financial Conduct Authority (FCA) for considering a new policy where they would publicly name and shame firms under investigation before any proof of wrongdoing is found. This has sparked a strong reaction from some in the financial industry, who believe it goes against the principle of innocent until proven guilty and could harm businesses’ reputations unfairly.

Trade bodies representing City firms are now urging the FCA to reconsider these plans. The trade group TheCityUK, for example, is being encouraged by its members to speak out against the FCA’s proposal. The chief of TheCityUK, Miles Celic, emphasized that the industry opposes the idea of naming and shaming firms before investigations are concluded, as it could damage trust in the industry and the UK’s competitiveness.

UK Finance, which represents banks and financial firms, has also received requests from companies to oppose these measures. They believe that publicly naming firms under investigation could unfairly harm their reputation and valuation, especially when most investigations end without any wrongdoing being found.

Many firms have already submitted responses against the FCA’s proposal, with concerns raised that it could particularly impact smaller companies and hinder innovation in the financial sector. There are worries that this approach, combined with other new regulations, might discourage fintech and tech firms from seeking regulation altogether.

The FCA has delayed the consultation deadline until May 30th, and they have indicated a desire to conduct investigations more efficiently and with a more targeted approach. However, the proposal to name and shame firms under investigation remains controversial within the financial industry.