This article was first published by FTAdviser on June 10.
Never before have the Financial Conduct Authority (FCA)’s proposals attracted such widespread outcry: from politicians, the financial services industry and practitioners alike, all have condemned the regulator’s plans announced in February 2024: to ‘name and shame’ investigation subjects at an early stage in the investigation.
There was no meaningful engagement with the industry on the proposals prior to publication of the consultation paper, which many were concerned was driven by the regulator’s desire to demonstrate publicly the action it was taking in a bid to quell the criticism experienced over the last few years.
Unfortunately, the proposals had the opposite effect and criticism culminated in a report by the House of Lords Financial Services Regulation Committee in February 2025, “Naming and Shaming: How Not to Regulate”1. The title says it all. However, in a welcome shift, the FCA has listened to feedback and abolished its plans, opting instead to retain the existing ‘exceptional circumstances’ test for announcing investigations with a few noteworthy modifications.
The FCA originally proposed moving to a “flexible public interest framework”, which many understood to mean that the regulator would publicly announce the majority of enforcement investigations early in the investigative process. Under the original proposals, the investigation subject would have received no more than one business day’s notice of an announcement and the FCA would have published updates to an investigation periodically, including on closure. The initial proposals were due to apply to all investigations open on the day the proposed policy came into force, as well as those opened thereafter.
The FCA’s new policy, introduced on 3 June 2025, provides for three additions to the circumstances in which investigations will be announced:
- Where suspected unauthorised financial services or a suspected offence relating to unregulated activity are being investigated and an announcement will warn consumers, investors or help the investigation;
- Where the investigation has been publicly disclosed by the subject, an affiliated company, regulatory body, government or public body; and
- Anonymised announcements, where it would assist in educating people on the misconduct being investigated by the FCA.
The changes will only apply to investigations launched on or after 3 June, another welcome change to the proposals first published.
A significant level of discretion is still afforded to the FCA under the new policy. For example, the new rules state that a FCA announcement “may also confirm the nature of the investigation as far as that has already been made public”.
It is easy to see the potential for differences in opinion on exactly what has been made public by an investigation subject and how that may be used by the FCA to detail the nature of the investigation in announcements when it suits their objectives. Any public disclosures by investigation subjects (or parent entities), such as those in audited accounts, will therefore need to be very tightly drafted with extra thought given to how they might be interpreted and used by the FCA.
Firms operating in multiple jurisdictions will also need to consider whether the details included in FCA announcements may impact notifications to regulators in other jurisdictions and act accordingly. Given the potential impact of an FCA announcement on a regulated firm, it would be wise for investigation subjects to initiate a dialogue with the FCA about any potential announcement early on in the investigatory process.
The FCA also has significant discretion regarding the content of anonymised announcements. These will need to be carefully drafted by the regulator and, potentially aggregated, to ensure that investigation subjects (and indeed, the relevant senior managers) are not identifiable or that particular sub-sectors in financial services are not unnecessarily de-stabilised.
Provided that announcements are appropriately anonymised, they could be useful tools to assist firms’ understanding of the FCA’s focus, the types of concern that are likely to tip a firm into enforcement and, therefore, encourage compliance. Firms should ensure that they monitor the FCA’s announcements going forwards to gain valuable insights into the regulator’s mindset.
The new policy is, without doubt, a significant improvement on the initial proposals and the FCA’s willingness to listen to criticism, amending its original proposals so significantly, is to be commended. However, the proof will be ‘in the pudding’ and the regulator will need to ensure that the negative feedback and concerns expressed in relation to the original proposals remain at the fore when drafting its announcements going forward.
1 https://publications.parliament.uk/pa/ld5901/ldselect/ldfsrc/76/76.pdf
