Publication of information about FCA Warning Notices


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Summary: The FCA previously announced that its policy when publishing information about enforcement Warning Notices would be to identify the firm(s) or individual(s) concerned. Now, having “carefully considered” consultation feedback, The FCA has announced that it believes that it would not normally be appropriate to identify an individual in a Warning Notice statement (although it will still usually identify a firm). This is a welcome change of policy by the FCA, and a reassuring indication that it does listen to consultation respondents and implement policy changes accordingly.

We were pleased to see that the FCA really does listen to respondents to its consultation papers and is prepared to change its policy in response to consultation feedback.

This week’s announcement (Policy Statement 13/9) concerned the FCA’s policy for using its new power to publish information about enforcement Warning Notices, which the FCA intends to implement by publishing “Warning Notice statements” on its website.  This power was granted under the Financial Services Act 2012, taking effect from 1 April 2013. 

The regulator said in its initial draft policy statement that its policy would generally be to identify the firm or individual concerned in the Warning Notice statement.  However, the latest policy statement declared that the FCA had “carefully considered” the feedback that it had received and decided to make policy changes as a result of that feedback.  The regulator now believes that it would not normally be appropriate to identify an individual in a Warning Notice statement (although it will still usually identify a firm).

The final policy statement explains that the FCA expects to publish a statement in most enforcement cases.  Circumstances in which it may be appropriate to publish a statement identifying an individual include:

(i) where it is necessary to avoid others being mistakenly identified as the person believed to be in breach or

(ii) where it is desirable to quash rumours in the market. 

There are bound to be practical difficulties in implementing this policy: for example, it is inconceivable that an anonymised Warning Notice statement relating to a significant matter would not trigger considerable speculation in the press as to the individual’s identity, with the result that, in almost all cases, the FCA would eventually feel the need to identify the individual concerned.  In such a case, the initial protection of anonymity arguably would have performed no useful function, and would instead have merely fuelled speculation in the market that may well damage the reputations of other individuals who may have no connection at all with the matters under investigation.  Talk about unintended consequences!

However, what seems clear is that the FCA is a regulator that intends to listen attentively to feedback in relation to the use (or proposed use) of its new powers.  This should be of some comfort to the regulated community in assessing the risks arising from the new regulatory powers conferred by the 2012 Act.  This clear message about the effectiveness of the feedback process will also serve as an encouragement to firms to respond to regulatory consultations (which have generally attracted fairly poor response rates).  This, in turn, will benefit both the regulators and those whom they regulate.

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