FCA to Abandon Public Interest Test under “Name and Shame” Plans

The British financial market regulator is about to announce its decision to scrap most of its controversial plan to “name and shame” more UK companies under investigation amid criticism from the public and policymakers.

No More “Public Interest” Test

As reported by the Financial Times, the Financial Conduct Authority (FCA) is expected to make plans around the policy official later today (Wednesday). Although the regulator is reported to be scrapping its new “public interest” test, it will continue with its existing stricter “exceptional circumstances” test.

The UK regulator first revealed its plans to “name and shame” companies under investigation once it opens a formal probe. The goal is to encourage witnesses and whistleblowers to come forward and deter misconduct in the industry.

However, the proposal attracted criticism across the board, including from many politicians and government officials who publicly opposed it. The plan, which sought to increase transparency by naming firms under investigation, was heavily criticised for its potential to harm company reputations before any wrongdoing was proven. Critics also argued that such a plan would drive businesses abroad while the country was trying to boost growth.

You may also like a lawyer's take on the "name and shame policy": "FCA Naming Firms under Probe May “Cause Circumstances to Spiral out of Control”

Politicians Against the Regulator

The FCA’s CEO, Nikhil Rathi, also appeared before the House of Commons Treasury Select Committee to justify the proposal. He acknowledged the backlash and said the regulator could have communicated the plans better and provided standard public notifications before announcing the proposal.

The FCA has updated its plan to introduce key changes, including a requirement to give companies at least 10 days’ notice before announcing an investigation publicly. The original proposal, which allowed just one day’s notice, was seen as too sudden and potentially damaging to businesses’ market positions.

Rathi also stated that the revised approach would incorporate a public interest test to help the FCA decide when it is appropriate to disclose a company’s name during an investigation.