The IUA has welcomed a decision not to change rules around the publication of regulatory investigations before they reach their conclusion. Under proposals previously announced by the Financial Conduct Authority (FCA), information about ongoing enquiries into alleged misconduct would be subject to a ‘public interest’ test. Currently, they are subject to an ‘exceptional circumstances’ test.
Such a move would have made it more likely that investigations may be published prematurely. The IUA had warned that this could create market speculation, cause irreparable reputational damage and drive firms to financial hardship, even though they may subsequently be found innocent of any charges.
Responding to an official FCA consultation exercise last year, the representative body for companies in the London insurance market said a change in the threshold for publication could create an unwarranted perception of systemic problems within the financial services industry, impacting other companies not subject to enquiries. The proposal also threatened to increase the cost and restrict the availability of directors and officers insurance for firms regulated by the FCA.
Helen Dalziel, IUA Director of Public Policy, said: “Our members were very strongly opposed to the FCA’s plans. It is good news that the test for publicising investigations will not be altered. We believe that the FCA already has the powers it requires to effectively carry out enforcement action.
“There is now less likelihood of negative publicity creating a prejudicial environment in which guilt is presumed. The concept of ‘innocent until proven guilty’ is a fundamental doctrine of criminal law and the mere association with an ongoing investigation could cause substantial harm to a firm’s standing in the market.
“Many investigations do not actually lead to any enforcement action and so publicising them prematurely would only have eroded, rather than encouraged trust and confidence in financial services.”
The IUA will continue to monitor the development of the FCA’s consultation exercise ‘CP24/2: Our Enforcement Guide and publicising enforcement investigations – a new approach’ and looks forward to viewing the final policy expected to be published later this year.
