Yesterday, the FCA published CP24/2, Part 2 in relation to its controversial ‘name and shame’ proposals, having trailed this in oral evidence before the House of Lords Financial Services Regulation Committee earlier this month. In the paper, the CP24/2 proposals have been re-drafted with a view to addressing the concerns raised about the original proposals (see our briefing here) and to give more clarity on how they would work in practice. The FCA also provides more data and case studies explaining how it could make announcement decisions.

On an initial view, the changes appear to be a considerable improvement on the original proposals and most firms will be hoping that none of this will become reality for them. However, the potential impact of the proposals on the few regulated and unregulated firms which are unlucky enough to be the subject of an announcement could still be significant.  We will follow up with further analysis regarding potential considerations for those responding to the consultation but, in the meantime, have summarised below the key changes.

The key changes in the paper are as follows: 

Inclusion of firm impact and other changes to the public interest test. The FCA proposes a number of changes to the public interest test:

• The impact of an announcement on the relevant firm would form part of the test and be “central” to the FCA’s consideration of whether to announce an investigation and name the firm. The original proposals expressly stated that the potential impact to investigations subjects was not included in the proposed public interest framework.
• The potential for an announcement to seriously disrupt public confidence in the financial system or the market is proposed to be a new factor in the public interest test. 
• The general reference to ‘otherwise advancing one or more of our statutory objectives’ is to be removed from the list of factors.

10 days’ notice and representations: The FCA is now proposing giving firms 10 business days' notice of an announcement (generally sharing a copy of the proposed announcement) so that they can make representations, with a further two days' notice if, following this, it decides to go ahead and announce (sharing the FCA’s reasons for the announcement and a copy of the final text of the announcement). This is an improvement on the originally proposed one day’s notice. 

No ‘big bang’ announcement of investigations already underway: There will be no proactive announcement of investigations that are already in progress when the proposals come into effect, although the FCA may reactively confirm ongoing investigations that are already in the public domain, where this confirmation is in the public interest. That being said, the exceptional circumstances test will continue to apply and could allow proactive announcements in relation to any investigations within the FCA’s existing portfolio. 

The FCA states that the proposals would affect only a subset of the “very small number of regulated firms” that it investigates, explaining that it typically opens investigations into 10 to 12 regulated firms each year; over 60% of its investigations are into unregulated firms and that, under its proposals, it would not announce in all cases, but only when, having weighed all the circumstances, it considers this would further the public interest. 

Responses to the proposals are to be given via an online questionnaire or in writing by 17 February 2025 and as expected the FCA has stated that the Board plans to decide on the proposals in the first quarter of 2025. 

Please reach out if you would like to discuss the implications for your firm, we would be interested to hear your thoughts and share ours in further detail.