UK finance watchdog should not publicise probes sooner, lawmakers say

FILE PHOTO: FCA signage is seen at the British financial regulator's head office in London

By Huw Jones

LONDON (Reuters) -Britain's financial watchdog should drop plans to speed up announcements of its investigations until a thorough analysis of their impact has been completed, a committee of lawmakers from parliament's upper house said on Monday.

The Financial Conduct Authority (FCA) proposed in February to announce corporate investigations earlier, publish updates, and close inquiries more quickly in an effort to prioritise cases with the most impact and reassure the public that "we are on the case".

Typically, the FCA only comments on its investigations once they have been resolved.

The House of Lords Financial Services Regulation Committee said it had written to the FCA to highlight its concerns at the watchdog's plans, saying they risked having a "disproportionate effect on firms named in investigations, where those firms are subsequently cleared of any wrongdoing".

"The FCA has not carried out a cost-benefit analysis of its proposal or even assessed its likely impact. That’s why we’re calling on the regulator to pause implementation until our committee has had a chance to gather evidence and scrutinise its proposal," the committee said in a statement.

The watchdog said on Monday it has been making wider changes to the way it enforces rules in order to deliver "more impactful deterrence and greater transparency".

"Announcing more of our investigations would bring us in line with several other UK regulators," the FCA said in a statement, adding that regulators like Ofcom, Ofgem and the Competition and Markets Authority announce their investigations.

Listed companies also have to announce they are being investigated if they believe it would affect their share price, it said. "Many do. We have reviewed these announcements and did not see significant market impact," the FCA said.

The committee said it would be taking evidence on the proposal, and was therefore calling on the FCA to extend its consultation period on the plans which is currently due to close on April 30, and take no further action until the committee has taken evidence and reached a conclusion.

"People wanted more time to provide feedback. We were happy to provide additional time. We will take time to carefully consider the views we receive before we consider what changes we make," the FCA said.

Last week, UK business minister Kemi Badenoch called on the FCA to scrap plans requiring financial firms to set targets for improving workforce diversity as government piles pressure on watchdogs to consider Britain's global competitiveness before writing and applying rules.

(Reporting by Huw Jones; Editing by Toby Chopra, Mark Potter and Emelia Sithole-Matarise)