Regulator retreat - FCA abandons ‘name and shame’ proposal

Last week the Financial Conduct Authority (“FCA”) announced its decision to drop the controversial proposal to publicise live enforcement investigations citing the “lack of consensus”.

Background

In February 2024, the FCA proposed a significant shift in its approach to publicising enforcement cases in Consultation Paper 24/2 (“CP24/2”) Part 1.  In a bid to increase transparency about its enforcement work and to protect consumers, the FCA introduced a plan to publicly disclose the names of firms under enforcement investigation at an earlier stage, with only one business day’s notice (see our previous article). The announcement stirred an almost unanimous rejection of the proposal by the industry.

In response to the feedback it received, the FCA published CP24/2 Part 2 which adapted the original proposal by extending the one business day notice period to 10 days, and by further expanding the public interest test to include potential impacts of disclosure on the firm under investigation.  However, this was not accepted as sufficient by industry.

The U-turn

On 12 March 2025, the FCA announced its decision to drop the ‘name and shame’ proposal. This announcement came after the consultation period for CP24/2 Part 2 concluded on 17 February 2025.

In a letter to the Treasury Select Committee (“TSC”), the FCA provided an explanation for its decision, highlighting the necessity of balancing regulatory effectiveness with fairness for those under investigation. Instead of implementing the 'name and shame' strategy, the FCA will maintain its existing policy framework, and so public disclosures regarding ongoing enforcement investigations will only be made in exceptional circumstances. This approach is designed to safeguard the integrity of the investigative process while ensuring accountability and transparency, when appropriate.

What’s next then?

The FCA clarified that it will issue a final policy statement by the end of June 2025 outlining the rules for less contentious proposals in CP24/2, including:

• Reactively confirming investigations already in the public domain, such as those following market announcements, firm disclosures, or announcements by partner regulators.
• Making public notifications regarding potentially unlawful activities of unregulated firms and regulated firms operating outside the regulatory perimeter, particularly when it helps protect consumers or advances investigations.
• Publishing greater detail of issues under investigation on an anonymous basis, potentially through a regular bulletin like "Enforcement Watch," to quickly highlight significant areas of concern and encourage firms to take corrective action.  CMS had made the point in its original article that it was unclear how publicly announcing the name of the firm under investigation advanced the FCA's stated objectives more than by publishing the same details about enforcement investigations on an anonymised basis and by reference to the firm's sector and type of business.

Non-financial misconduct and Diversity and Inclusion proposals

The FCA’s published guidance had been expected in Q1 2025 but the FCA has confirmed that it will set out next steps by the end of June 2025. 

The FCA’s letter to the TSC reinforced the FCA’s commitment to safeguarding consumers from financial misconduct and highlighted the importance of addressing non-financial misconduct to improve market outcomes.  The FCA confirmed that it would take further time to ensure the approach is proportionate and aligned with planned legislation (which has changed since the FCA initially consulted).

In terms of diversity and inclusion, the FCA echoed the TSC’s view that regulatory bodies should contribute to fostering diversity and inclusion within the financial services sector. However, the FCA has decided against mandatory data collection, citing concerns that such a requirement would impose additional policies in an already heavily regulated environment, which is already governed by existing legislation and obligations. Instead, the FCA will focus on supporting voluntary initiatives within the industry to promote these important values.

Commentary

The FCA’s decision to retract the ‘name and shame’ proposal signals a clear acknowledgment by the FCA of the significant concerns raised by stakeholders and the broader industry.

It also underscores the delicate balance regulators must strike between transparency and maintaining a competitive, fair market. While the move may be seen as a retreat, it also highlights the FCA's responsiveness to feedback and its commitment to ensuring regulatory policies align with the UK's broader growth objectives.  

The decision to drop the ‘name and shame’ proposal was made in the wider context of the Government’s economic growth push – announcing enforcement investigations as per its proposal would have made the UK a global outlier, inconsistent with the Government’s call to regulate for growth.

This article was co-authored by Anna Burdzy, Trainee Solicitor at CMS