In a statement released this afternoon, PIMFA has raised serious concerns about the impact of making public possible enforcement against firms by the Financial Conduct Authority (FCA) given the potential market harm it could cause.
Alexandra Roberts, Head of Regulatory Policy and Compliance, commented: “It is not immediately clear to us how public announcements of potential enforcement action will support the FCA’s approach to supervision and enforcement – it seems unlikely to us that being ‘named and shamed’ publicly would be the primary deterrent for a firm committed to introducing harm into the market.
“More broadly, very real consideration needs to be given to what the potential impact will be on firms that are publicly subject to enforcement action. These announcements will lead to significant outflows for small firms in particular, rendering their businesses hollow shells of what they were previously, whilst larger listed firms will almost certainly be subject to significant shareholder volatility.
“The FCA’s caveat that an investigation does not automatically mean that there has been misconduct, or breaches of their requirements, simply will not register with the wider public and the market. If the FCA is committed to doing this – and we would urge them to really consider if they should – they need to give very real consideration to where the bar for a public announcement is set and who really benefits from a public announcement.”
