Investigating Financial Institutions: Name-and-Shame Rules Sparks Concerns
A proposal by the Financial Conduct Authority (FCA) to disclose the names of financial institutions under investigation has drawn criticism from industry leaders. Miles Celic, CEO of TheCityUK, warns that such measures could deter overseas investment and potentially trigger bank runs.
Celic asserts that the proposals create a presumption of guilt rather than innocence, potentially damaging companies' reputations even if no wrongdoing is ultimately found. He also raises concerns about the spread of misinformation via social media, amplifying negative impacts on the market.
The FCA's consultation on the matter closes on Monday. Despite claims that the rules aim to enhance accountability and protect consumers, Celic argues that they could stifle growth, particularly in light of "economic excitement" in the US.
He also expresses reservations about the FCA's proposed diversity, equity, and inclusion (DEI) regulations, suggesting they may add unnecessary reporting burdens without tangible benefits.
The proposals have previously faced objections from the House of Lords financial services committee, which deemed them unacceptable. The committee urged the FCA to abandon its plans, citing the potential for unfair damage to innocent companies.
The FCA has defended its proposals, stating its intention is to improve accountability and provide information to consumers and firms. It has acknowledged feedback and amended its plans, including considering the reactive confirmation of investigations and announcing investigations into unregulated firms.
Industry stakeholders remain cautious, emphasizing the need for balanced and effective regulation to foster economic growth.