UK'S FCA TO TAKE SEVERAL MONTHS TO CONSIDER 'NAMING AND SHAMING' BACKLASH

By Huw Jones and Kirstin Ridley

LONDON (Reuters) -Britain's financial watchdog said on Wednesday it would take several months to consider the backlash to plans to "name and shame" companies it is investigating, sidestepping a call from the finance ministry to ditch the initiative.

The Financial Conduct Authority (FCA) hopes its proposal to identify companies early on rather than after a probe has been concluded will work as a deterrent.

"In terms of the reaction, in truth, we weren’t at the time we put this out expecting such a stern reaction as has come from industry.... No decision has been made yet," FCA Chair Ashley Alder told parliament's Treasury Committee.

"It is also really, really clear there is no presumption to disclose or name. As we develop this, discuss it, take on board the feedback, we will start thinking about what criteria will be applied," Alder said.

FCA CEO Nikhil Rathi told the committee it would be "several months" before the watchdog announced its next move.

Earlier on Wednesday, Britain's financial services minister Bim Afolami criticised the proposals, along with plans by the FCA to require additional reporting requirements on firms to improve diversity among employees.

The FCA also has a new, secondary remit to aid the financial sector's global competitiveness, but critics, including the finance ministry, say the "naming and shaming" proposals appear at odds with this by piling on unnecessary red tape.

"The signal to international investors, and to people in this country, is that the regulator still doesn't get it," Afolami told a Financial Times event.

"When they say they don't have resources sometimes to deal with things, I say stop focusing on things that are non core like naming and shaming or this diversity consultation, and focus on conduct and making sure the system works properly for consumers and producers," Afolami said.

Afolami has said regulators need to accept a greater level of risk in the system to allow for innovation, but progress on this has been "mixed".

The FCA is independent of government, but is accountable to parliament, and its top officials will appear before parliament's treasury select committee later on Wednesday to be questioned about the naming and shaming proposals.

Afolami said there was no danger of politicising regulators given they operate under the umbrella of parliament, and were not independent in the same way as judges, meaning it was legitimate to ask them to think again on some proposals.

The FCA will issue a report on how it has applied its new competitiveness objective.

(Reporting by Huw Jones and Kirstin Ridley, Editing by Louise Heavens, Alexandra Hudson and Alison Williams)

2024-05-08T14:23:56Z dg43tfdfdgfd