The Financial Conduct Authority is going to make a decision on its ‘name and shame’ proposals early next year.
In a speech, delivered yesterday (October 17) at a City dinner at Mansion House, Nikhil Rathi, FCA chief executive, said the regulator wanted to “work through” some of the concerns industry had with the proposals.
“Next month, we will provide more data and case studies on how a public interest test could work in practice.
“This is about firms, not individuals. 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.
“Where we decide to name a firm in the public interest, it wouldn’t by default be when an investigation starts. Unlike in many jurisdictions, our enforcement investigations typically follow at least a year of supervisory engagement.
“We would give firms of all sizes longer to make representations about impact. And we know we have to be particularly mindful of impact on small firms,” he said.
Risk
Rathi highlighted how the FCA were “up for” taking on greater risk, adding that more radical reforms on prospectuses were “readying for take-off”.
“The advice guidance boundary review seeks innovation so people can access affordable support. But if that results in greater holdings in investments not cash, more will be at risk from short-term market volatility.
“You have until Halloween to tell us how we can use the consumer duty to trim our rule book.
“Fewer tick boxes, less cost; no doubt welcome. But if we streamline disclosure, affordability or product rules, will firms be spooked if they have responsibility for outcomes without the comfort blanket of rules or guidance?
“Outcomes-based regulation brings risk as well as opportunity. Our history shows the value of risk taking,” he added.
Rathi asked the audience whether the market would accept more risk and where industry could go further.
He asked: “Can we build on enhanced supervision for newly authorised firms with an L-plate for provisional authorisations … even if that means more firm failures, and increased FSCS costs?
“What if we bring promising startups together with venture capital? Would we be conflicted, in the event of future problems?”
Rathi told guests that there was “much more on its way” from the regulator, stating that not everyone would always agree.
“We should challenge one another on risks we’re willing to accept for growth.
“The foresight to invest for the long term, particularly in technology. Acceptance that that brings opportunities to succeed but also to fail. A shift in our public discourse when that happens. And ownership of outcomes we are seeking, leaving behind prescriptive rules.
“In short, isn’t it time to stop admiring the problems and execute solutions? To collaborate to deliver growth rather than compete for who’s done best,” he concluded.
