FCA clarifies approach to naming and shaming insurers

In the updated policy statement, the FCA confirmed it can only name subjects of investigations in a limited set of circumstances, rather than when it deems there is a public interest as it had previously pushed for.

The watchdog can name an individual being investigating for suspected unauthorised financial services, including financial promotions without appropriate approval; or a suspected offence linked to unregulated activity if an announcement is considered desirable to warn consumers or to help the FCA’s probe by bringing forward witnesses.

Given the lack of consensus, we will not take forward our proposal to shift from an exceptional circumstances test to a public interest test for announcing investigations into regulated firms.

The regulator can also still publicly confirm it is investigating a subject if an affiliated company, regulatory body, government or public body in the UK or a partner jurisdiction has already made that fact public.

The FCA stated that a follow-up announcement may also confirm the nature of the investigation.

The regulator will be able to announce it is investigating a particular matter on an anonymised basis without naming or identifying the subject of the investigation.

According to the FCA’s policy, this approach allows it to educate people generally about the types of conduct it is looking into and encourages firms to comply with rules and other requirements.

The FCA’s 159-page policy statement, titled Our Enforcement Guide and greater transparency of our enforcement investigations, also acknowledged concerns about prolonged investigation timelines and confirmed steps have been taken to streamline the enforcement process.

It has raised the threshold for opening an investigation and strengthened pre-investigation assessments, which the City watchdog claimed result in fewer but faster cases.

As part of its strategy to be a “smarter regulator,” the FCA stated the changes will better support growth, improve consumer outcomes, and bolster efforts to combat financial crime.

Step back

In February last year, the FCA began a consultation on plans to make its investigations more transparent, which included publicly naming the firms it was investigating when there was a public interest.

This proposal resulted in 16 trade bodies writing to then-chancellor Jeremy Hunt to intervene.

At last year’s British Insurance Brokers’ Association conference, the FCA’s COO Emily Shepperd admitted the regulator was “overwhelmed” with the response.

Following the conference, the regulator launched a second consultation that significantly softened the naming and shaming proposals.

In a letter sent to the Treasury Select Committee in March, the FCA stated: “Given the lack of consensus, we will not take forward our proposal to shift from an exceptional circumstances test to a public interest test for announcing investigations into regulated firms.”