High Court Backs FCA’s Ability to ‘Name and Shame’ Firms in Exceptional Cases

FCA Now More Likely to ‘Name and Shame’ Firms That 'Fall Foul' of the its Regulations

The High Court has confirmed that the Financial Conduct Authority (FCA) can, in exceptional circumstances, warn the public before it concludes an investigation. This is great news; we need a faster-acting FCA to protect, especially vulnerable customers, from the most errant offenders. 

FCA regulations and rules are not optional, but mandated upon all regulated firms to protect us as customers. Too many firms and their management treat the rules with disregard or even contempt.  

The High Court dismissed a judicial review that challenged the FCA's ability to publicly name a firm whilst it performs an investigation. Fabulous news. If a firm ignores the rules that keep my money safe, or if its board prioritises profit over security, safety and customers, or it does not have systems to stop wayward practices, nor challenge illegal decisions or if it has inadequate capital or a disregard for customer complaints: then I want my family and friends protected from that firm. This means quickly, and before all the money is lost or the damage done!

We see lots of errant firms in our work and help them work smarter. Whilst we don’t know the details of the firm in question, we are certain that firms that are named will be significant offenders. And whilst the FCA probably can’t mention it, we'd guess that the offenders will have been so errant that they would obstruct and challenge the FCA even to hinder an investigation.

An FCA investigation must demonstrate that any decision to name a firm is based on exceptional circumstances and not an everyday FCA investigation - which of course adds a good test too, that protects firms from FCA error.

This is great news for everyone; it means that bad business will be driven away, and it means that firms will treat the FCA and its regulations that protect us more seriously. And it means that the UK stays at the forefront of regulated and compliant business. 

If you work in compliance or risk management, if you are an MLRO or an executive in a regulated firm, that is failing to ‘do what is right’, you can now expect to be punished faster and publicly. You will also need to make sure that your CEO and communications team have a proactive media plan if the FCA names your firm, and by default you personally! But hopefully you will make sure that it doesn't come to that!

Kevin Smith and Bill Trueman are directors at Riskskill, and are payments and risk specialist, with over 25 years of experience. For more information about Riskskill visit website at www.riskskill.com