May '24 • General 💡
Has the FCA solved a problem that doesn't exist?
You’d feel bad enough if your firm was under investigation by the FCA, but imagine how much worse the situation would be if (regardless of firm size) that investigation was made public!
Well, that’s what the FCA has recently been consulting on.
In fact, their consultation on plans to publish the names of firms under investigation (remember, guilt and blame haven’t been found at this stage) closed last week.
We are very concerned (and so should you be) about the implications of this. So last week we submitted our views to the FCA making them aware of the potentially dire consequences to firms, particularly small and medium-sized businesses, when approximately two-thirds of FCA enforcement investigations ultimately result in no action.
We believe naming firms would make them immediate targets for claims management companies, who once they learn a firm is under investigation will start to target them with adverts on social media. Exactly as we’ve seen some firms do with SJP.
So even if no further action is taken against the firm under investigation (and remember, there’s a better than 50/50 chance there won’t be) they’ll now have to deal with another problem. The reality for compliant and viable small- to medium-sized firms, is that the consequence of being named and shamed may very well lead to their failure.
In other words, if the FCA don’t get them, the CMCs will!
So far the House of Lords has slammed the FCA for not pausing the name and shame plan (and we’ve had our say too) but the regulator seems adamant to pursue this controversial development, despite not providing any tangible evidence as to why it is necessary.
Thoughts welcome!
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Has the FCA solved a problem that doesn't exist?
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