Speaking to a House of Lords committee on Wednesday, Nikhil Rathi, chief executive of the FCA, said the UK regulator would submit revised proposals “in the next week or so” before making a final decision early next year. He admitted there were “things we could have done differently” when the proposals were announced back in February including better communication with the industry and adding the plans to the FCA’s Regulatory Initiatives Grid.

The revised plan will include giving companies at least 10 days’ notice before announcing the investigation, instead of the single day initially proposed.

The regulator will also expand on its definition of the public interest test. Rathi said: “We have heard concerns that the public interest test is too vague. We will address that, and we will also be mindful of small firms.”

He added: “This is not a case of us opening up the entire book of investigations, that was never our intention.”

Open investigations

The regulator said there are currently 47 open investigations into regulated firms and the identities of 27 of those cases are already in the public domain, usually disclosed by the firm itself.

Currently, the FCA has the power to name companies under investigation in exceptional circumstances. Referencing the new plans, Rathi said: “We’re talking about incremental transparency each year, two to three; maybe in a busy year a little bit more than that but very specific contextual reasons for each case.

“It’s a quite small numbers and I think that’s something we didn’t really convey effectively in the first round of engagement.”

The Members of the House of Lords financial services regulation committee raised concerns that, as two-thirds of FCA investigations have ended without any enforcement action, then plans to “name and shame” could damage reputation of firms and lead to financial loss.

Ashley Alder, FCA chair, said the changes were aimed at preventing more harm being done to consumers while the FCA investigates the firm, such as the British Steel pension scandal. He said the new approach would lead to names of firms under investigation, being disclosed from “very rarely” to “sometimes.”

FCA’s next move

The FCA will provide an update on its proposals next week with the final plan, on approval from the regulator’s board, due early next year.

The House of Lords financial services regulation committee will publish its report on the issue next month.

Will the City be impressed with next week’s update from the FCA? Check back next week and we’ll let you know. In the interim, check out our article published in April Industry reacts as House of Lords calls on FCA to halt name-and-shame plans.