The Financial Conduct Authority (FCA) has confirmed it is dropping its proposal to move from an exceptional circumstances test to a public interest test for announcing investigations into financial services firms.

Following widespread concern from the industry and parliamentarians, the FCA decided to drop its ‘name and shame’ proposal and focus on refining the existing exceptional circumstances test.

In a letter the Treasury Select Committee, the FCA outlined that it was accelerating its enforcement work and set out its next steps on its approach to transparency of enforcement investigations.

Following engagement with the industry, the FCA said there was support for reactively confirming investigations already in the public domain; public notifications that focus on the potentially unlawful activities of unregulated firms and regulated firms operating outside the regulatory perimeter; and publishing greater detail of issues under investigation on an anonymous basis.

The regulator is therefore taking these proposals forward and expects to publish its final policy by the end of June.

“We are speeding up our enforcement work,” stated FCA chief executive, Nikhil Rathi. “On our enforcement transparency proposals, we have always aimed to build a broad consensus.

“Considerable concerns remain about our proposal to change the way we publicise investigations into regulated firms, so we will stick to publicising in exceptional circumstances as we do today.

“We will implement changes which have commanded wider support and which we believe will help support our efforts to protect consumers from harm.”

Also commenting on the announcement, PIMFA chief executive, Liz Field, said: "The FCA has recognised the concerns of PIMFA and other industry bodies regarding its enforcement proposals. We welcome their decision to instead deliver a balanced and proportionate solution.

"The approach put forward today aligns with their regulatory objectives while also considering the needs of businesses and supporting the UK’s competitiveness and economic growth.

“We particularly commend the FCA’s constructive engagement with us and the wider sector in recent months and its responsiveness in demonstrating flexibility and incorporating industry feedback."

Investment Association CEO, Chris Cummings, added: "We are extremely pleased the FCA has listened to industry concerns and agreed to drop the proposed changes to when regulated firms under investigation are named, instead refining the exceptional circumstances test as we recommended.

“It is vital that the UK remains globally competitive and attractive for investors and today's decision from the FCA demonstrates its willingness to deliver on its secondary objective to secure UK competitiveness.

“We will continue to work with the FCA in support of their objective to improve the speed and transparency of enforcement action."

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