Reactions to the FCA's plan to publicise enforcement cases range from radical, risky to unconvinced around transparency

The FCA published a consultation paper (CP 24/2) at the end of February setting out its approach to publicising when cases are opened and closed. In a bid to be more transparent about what it investigates, the FCA will use a public interest assessment framework to determine which cases to publicise. Cases involving individuals will not be publicised and firms will be given 24 hours' notice before a such announcement is made. Having previously declined making enforcement cases public, citing that statutory confidentiality requirements in primary legislation places a professional secrecy regime on regulators, the FCA’s changed view proves controversial.

In an interview with Thomson Reuter’s Rachel Wolcott, Ned Beale, one of our commercial litigation partners, said: "We welcome increased transparency and bringing enforcement investigation disclosure into line with the Competition and Markets Authority’s approach, but we'll be interested to see how the new approach interacts with the confidentiality requirements of s348 of FSMA." That section of the Financial Services Markets Act (FMSA 2000) restricts disclosure of confidential information.

Ned also provided context around the disquiet that victims suffer not knowing if the FCA is investigating a matter and the delays sometimes seen in the FCA addressing problems. Issues such as the British Steel Pension Scheme scandals have shown individual Financial Ombudsman Service cases and scrutiny by Parliament considerably ahead of the FCA.

Some commentators highlight the value of the confidentiality around an investigation in light of the concern that any regulated firm is going to have if the investigation is announced before there has been any finding of any actual wrongdoing or compliance failure within their organisation, and the damage to their reputation and to their business that may do.

Others highlight the tension between simply announcing that an investigation in relation to a named firm is going on (which is not going to give the desired transparency), and going into lots of detail about what the investigation is about, what the suspected breaches are, and what the circumstances of those suspicions are, which on the face of it is subject to the professional secrecy regime in the Act. Confidence is required to convince firms that the information they supply to the regulator remains confidential.

Hausfeld will be replying to the consultation, in support of the change to publicise investigations.

The full article.

Other Publications