close
close

Stop naming and shaming and focus on your core role, Britain’s financial watchdog has said.

By Huw Jones

LONDON (Reuters) – Britain’s Financial Conduct Authority should focus on its core role of maintaining order in markets, and not sending the wrong signals to investors with proposals to blow the whistle and blow the whistle, a British Financial Services Minister Bim Afolami said on Wednesday.

The FCA has faced widespread backlash against its proposals to name companies it investigates early on, in a bid to increase deterrence, rather than after the investigation has concluded. He also proposed additional reporting requirements for companies to improve diversity among employees.

The FCA also has a new secondary mission of helping the global competitiveness of the financial sector, but critics, including the Department of Finance, say the “naming and shaming” proposals appear at odds with this by piling up unnecessary administrative formalities.

“The signal to international investors and people in this country is that the regulator still doesn’t get it,” Afolami said at a Financial Times event.

“When they sometimes say they don’t have the resources to handle things, I tell them to stop focusing on things that aren’t essential like naming and shaming or this diversity consultation, and focus on driving and making sure the system works well for consumers and producers,” Afolami said.

Afolami said regulators must accept a higher level of risk in the system to enable innovation, but progress in this area has been “mixed”.

The FCA is independent of government, but it is accountable to Parliament, and its senior officials will appear before Parliament’s Treasury Select Committee later on Wednesday to be questioned over the nomination and shaming proposals.

Afolami said there was no danger of politicizing regulators given that they operate under the auspices of Parliament and are not independent in the same way as judges, meaning it is legitimate to ask them to think again about certain proposals.

The FCA will publish a report on how it has implemented its new competitiveness target.

(Reporting by Huw Jones, editing by Louise Heavens, Alexandra Hudson)