FCA U-turns on ‘name and shame’ proposals but confirms other changes for greater transparency

The abandoned proposals were designed to shift its approach to publicly naming subjects of its enforcement investigations, from an “exceptional circumstances” test to a “public interest” test. The so-called ‘name and shame’ proposals were intended to increase the regulator’s ability to publicise investigations, and see it publicising information on who it is investigating and why, where it considers it to be in the public interest to do so.

The draft policy was first announced when it opened a consultation in February 2024, as part of the FCA’s strategy to achieve deterrence and tackle serious misconduct. But due to significant criticism and concern from industry and Parliament, the FCA revised its proposed policy in November 2024.

In part 2 of its consultation, the FCA proposed a softened set of rules relating to the naming of subjects under investigation. These proposals included a more detailed “public interest” test which included the consideration of the potential commercial impact on a firm of publicly naming it as the subject of investigation.

The FCA’s latest decision to abandon the ‘naming and shaming’ element of the proposals comes a month after the Financial Services Regulation Committee of the House of Lords published a scathing report responding to the November 2024 consultation. Lord Forsyth, chairman of the committee, said: “It was incumbent on the FCA to make a strong and unequivocal case for why such a fundamental change was needed and it has failed to do that. Its consultation on the changes has been an abject failure and even the FCA chairman acknowledged this has not been the FCA’s ‘finest hour’.”

In the FCA’s letter to the Treasury Select Committee, it cited a “lack of consensus” as to the appropriateness of a shift to a public interest test for the naming of subjects of investigation and confirmed it would not proceed with it. This means the FCA will continue to apply the “exceptional circumstances” test for publicising investigations into regulated firms.

Sébastien Ferrière of Pinsent Masons said: “The FCA’s decision to drop the ‘naming and shaming’ approach is a welcome one, particularly in light of the prevailing economic growth and international competitiveness agenda of the government. In our response to the FCA’s consultation paper, we had suggested that the FCA could achieve a number of its stated aims through the prompt and proactive publication of enforcement themes on an anonymised basis, to support the public interest and market education without causing unnecessary harm to businesses.”

Currently, the FCA’s normal approach is not to make public the fact that it is or is not investigating a particular matter, or any of the initial findings or conclusions of an investigation. The regulator will only make this information public when there has been a formal finding leading to a statutory decision notice, or in “exceptional circumstances” where disclosure is necessary to maintain public confidence – such as where the matters under investigation have become the subject of significant public concern, speculation, or rumour. 

However, the FCA still intends to proceed with the less contentious aspects of its proposals to bring greater transparency and consumer protection. These include reactively confirming investigations which are officially announced by others, such as in market announcements, disclosures made by firms themselves, or announcements by a partner regulator.

Another measure will see the FCA publish greater detail of issues under investigation on an anonymous basis, possibly via a regular bulletin such as Enforcement Watch. The FCA said that this may help highlight more quickly significant areas of concern and where firms may consider making improvements. Anthony Harrison of Pinsent Masons said: “This particular aspect of the FCA’s announcement will be welcome news to many in the industry, who have long been supportive of efforts by the regulator to issue greater guidance as to what it considers good or bad practice. Having greater and earlier sight of the FCA’s enforcement pipeline will help ensure the latter can be promptly identified and remediated.”

The FCA also plans to make public notifications that focus on the potentially unlawful activities of unregulated firms and regulated firms operating outside the regulatory perimeter, where doing so protects consumers or furthers the investigation.

The FCA said it will continue to engage with stakeholders before publishing a final policy statement by the end of June. Its Enforcement Guide will be updated at the same time.