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FCA will publish early warning notices in bid for transparency

The FSA has outlined how the Financial Conduct Authority will use its new powers to publish early warning notices against firms or individuals subject to ongoing enforcement action.

The powers mark a radical departure from the current system where ongoing enforcement cases can only be made public at the decision notice stage, where firms have had a chance to respond to allegations against them at the independent Regulatory Decisions Committee.

In a consultation published this week, the FSA says the new power will only apply to disciplinary matters such as proposed fines, suspensions or censures, and will not apply to proposed bans or the withdrawal or cancellation of permissions.

The RDC, the first part of the regulator’s appeals process, will decide whether to publish an early warning notice.

The regulator says warning notices are only issued after enforcement has carried out an investigation which can take months or years.

Warning notices will not be published where it is unfair to the person involved, prejudicial to the interests of consumers or detrimental to the stability of the financial system.

Those arguing it would be unfair to publish would have to prove publication could materially affect their health, result in a disproportionate loss of income, or prejudice criminal proceedings against them.

Warning notices will carry a disclaimer that the statement is not the final decision. If a case is later dismissed, the FCA will publish a notice of discontinuation on its website.

The FSA says: “The principal purpose of the power is to promote early transparency of enforcement proceedings. Its introduction marks a real departure from the previous regulatory regime and is a bold move towards more transparent and open regulation.

“Both the financial services industry and consumers will be able to understand the types of behaviour the FCA considers acceptable at an earlier stage, which in turn will strengthen the FCA’s continuing enforcement strategy of credible deterrence.”

London & Country associate director of communications David Hollingworth says: “It is good there is an independent body in place to keep a sense check on these decisions. It is hard to argue against more transparency in regulation.”


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