Stay informed with free updates
Simply sign up to the UK financial regulation myFT Digest — delivered directly to your inbox.
The UK financial watchdog has tried to reassure critics of its plans to publicly “name and shame” more companies it investigates by saying the changes will only have an impact in “relatively few cases”.
Nikhil Rathi, chief executive of the Financial Conduct Authority, told the annual City Dinner in London on Thursday that he had “heard the strength of opposition” to the proposals and pledged to adjust them, such as by giving companies more notice before they are named.
His comments come only days after Sir Keir Starmer vowed to “rip up” Britain’s bureaucracy and urged regulators to prioritise growth, as the prime minister this week used an international investment summit to drum up more funding for projects in the UK.
The FCA is under pressure to show it is meeting the extra objective to consider growth and competitiveness it was given by the government last year.
Rathi conceded that “the jury is out on whether the FCA is helping to achieve growth”, adding: “We clearly have more to do.”
The regulator triggered a fierce backlash from the City earlier this year when it proposed increasing transparency on its enforcement activities by introducing a “public interest test” to decide when to publicly disclose which companies it is investigating.
The FCA currently only discloses details of its enforcement activities mid-investigation in “exceptional circumstances”, such as to help bring forward witnesses.
But there has been pressure for the FCA to be more transparent about its investigations, including a call two years ago from the House of Commons public accounts committee as part of its investigation into the British Steel workers’ pensions mis-selling scandal.
Rathi said: “Our current approach doesn’t work. We think a degree more openness can reduce harm, build whistleblower confidence and benefit firms that play by the rules.”
“We hope to reassure the sector — here and overseas — that relatively few cases would be affected, given so many are already disclosed, mostly by firms themselves,” he said.
The FCA would provide more data and case studies on how the proposals would work in practice next month and its board planned to take a final decision “early next year”, he said.
UK Finance, the banking lobby group, said it was “good that they are listening and reflecting on feedback” but the industry would wait to see “where the FCA ultimately lands on this”.
Earlier this year, UK Finance slammed the FCA’s proposals as potentially “harmful to wider financial stability as well as to the firm that is subject of the investigation”. It said companies should be given more than one day’s notice before they are named.
Speaking at the same event, the head of the Bank of England’s Prudential Regulation Authority announced plans to shorten the time that bankers have to defer bonuses, giving this as an example of how it was adjusting rules to support growth.
Sam Woods said the UK had become “something of an outlier” in requiring top bankers to defer part of their bonuses for as long as eight years, which was “longer than they need to be to create the right incentives for safety and soundness”.
He said the overall bonus deferral period would be shortened to five years for the most senior bankers and four years for some other executives. Bankers will also be able to receive some of their bonus in the first year instead of having to wait three years.
Read the full article here