Currently under debate in consultation paper CP13-08, the FSA’s suggestions form part of an increasingly interventionist approach that is to be pursued under the regulator’s successor the Financial Conduct Authority (FCA).
Read more about the FCA’s consultation paper on transparency and what it could reveal about your firm.
This was set out under ‘Journey to the FCA’ published last year and has been demonstrated further through the use of mystery shoppers as an intrusive monitoring device of advice suitability.
Become mystery shopper savvy by reading the FSA fixes to five common advice flaws.
Ian Stott, client services director at The Consulting Consortium, said publicising enforcement action is just one of the new powers that would allow the FCA to announce it has begun disciplinary action against a firm or individual.
He said this is just one step on from the current system of publishing enforcement after the event.
Fairness to firms
Under the proposed rules the FCA will have to consult the firm and/or individual before publishing details of its enforcement proceedings, which could include a warning notice; proposing disciplinary action; or signalling the start of formal action.
The firm or individual will be able to appeal to the FCA under section 391(6) of the Financial Services and Markets Act if they feel the publication of a warning notice would be unfair to the individual, prejudiced on behalf of consumers, or a threat to the stability of the UK financial system.
“To be fair to all parties concerned here, the expression ‘credible deterrent’ has been mooted by the FSA on many occasions heralding a new chapter in the UK financial services regulation. The FSA has made it clear it will not publish warning notices where the likely outcome will be unfair on the firm or individual.
“It seems likely that the new powers will be focused on ensuring the impact of immediate conduct risk on unsuspecting consumers is minimised,” Stott concluded.
