A trade association representing 300 UK banks and financial services firms has criticised plans by the Financial Conduct Authority (FCA) to publicly name firms under investigation.

In February, the UK financial watchdog launched a consultation which revealed plans to publish updates on investigations and be open about when cases have been closed with no enforcement outcome. The authority is also planning to conduct investigations more quickly and with a more focused number of cases.

But a UK Finance spokesperson told FStech that the move raises a number of issues for the banking and financial services market.

"We believe the current proposals are disproportionate in that they could result in firms suffering real damage in terms of their reputation and valuation, given the majority of FCA investigations are closed with no further action," they said.

The organisation also warned that the proposals have the potential to harm the UK's competitiveness and attractiveness as a financial centre.

UK Finance is currently compiling its response to the regulator's consultation, with plans to submit them to the FCA to set out the industry’s views and concerns.

“We have been consulting on announcing our investigations, on a case-by-case basis, where it is in the public interest to do so," an FCA spokesperson told FStech. "We believe doing so will give all the firms we regulate and the wider public better insight, earlier, about issues we are concerned about."

They went on to say that announcing more of its investigations would bring it in line with several other UK regulators, including Ofcom, Ofgem, and the Competition & Markets Authority (CMA).

Economic secretary to the Treasury Bim Afolami said: "This is a matter for the FCA, who have led this work independently of HM Treasury. However, we are engaging with both the FCA and industry as the proposals are developed, in particular to ensure that any potential impacts on competitiveness are properly considered.”

Earlier this year, the FCA said that any decision to announce an investigation would be taken on a case-by-case basis and depend on a variety of factors which will indicate whether to do so is in the public interest.

These include whether the announcement will protect and enhance the integrity of the UK financial system, reassure the public the FCA is taking appropriate action, or assist in any investigations.

The regulator assured firms that announcing an investigation would not mean that the FCA has decided whether there has been misconduct or breaches of its rules.

At the time, Therese Chambers, joint executive director of enforcement and market oversight at the FCA said that the move would "enhance public confidence".

"At the same time, we will amplify the deterrent impact of our work by enabling firms to understand the types of serious failings that can lead to an investigation, helping them to change their own behaviour more quickly," she continued. "Greater transparency will also drive greater accountability for us as an enforcement agency."

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