Alleyne says “it remains essential for those in the regulated sector to clearly and objectively set out to the FCA the potential damage that could be caused by these proposals, and to engage with the regulator sensibly to communicate the likely harm to market participants”.
The FCA recognises that a more transparent approach may raise concerns about the potential impact on investigation subjects, but it has not included such impact as a specified factor in its proposed framework.
If the FCA’s aim is to improve transparency about enforcement investigations, this could still be achieved without naming those it is investigating, says Jamieson.
“Simply publishing details of the types of compliance issues and potential rule breaches being investigated on an anonymised basis would likely achieve the same outcome.
“It would show the market that the FCA is particularly focused on an issue, trigger firms to review their own controls in that area, and create a powerful deterrent.”
The FCA will be under a duty to consider feedback on its proposals, says Pygott at Addleshaw Goddard. “If widespread concern in the market is communicated back to the authority in response to the consultation, it might change course.”
But experience suggests a complete change of position is unlikely, he adds. “Modification of the proposals, for example by introducing more guard rails into the text of the proposed new enforcement guide, seems a more realistic objective for those concerned by them.”
Indeed, Morris says that as the FCA has trumpeted the policy, it would be an “enormous retreat and loss of face” for the regulator not to proceed.
“I think the FCA is likely to go ahead with this. Otherwise it will basically be saying, ‘We make a proposal and if firms make enough noise, we drop the proposal’. And that's not a message that they would be very happy getting out.”
Chloe Cheung is a senior features writer at FT Adviser
