LONDON — The U.K. government is going to war with the City watchdog over its controversial plans to “name and shame” financial companies suspected of wrongdoing.
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt are said by one Treasury minister to be “fuming” about the Financial Conduct Authority’s push to publicize the name of firms being probed, before any proof of guilt.
The City watchdog claims the move will deter bad actors and reassure consumers, but financial services companies believe they’ll be presumed guilty before proven innocent and could suffer a loss of customers and revenue if the public knew they were being investigated — even if they later go on to have their name cleared.
Conservative City Minister Bim Afolami told representatives of a finance lobby group last week that Sunak and Hunt are “all over it … and they are fuming” — POLITICO has seen the minutes of that meeting.
The meeting notes also reveal that Afolami told City representatives to write to the chancellor asking him to intervene, which the bosses of 15 financial services trade bodies did on Friday afternoon.
They warned the “name and shame” plan “would have a negative impact on their valuation, could put at risk the wellbeing of individuals, and had the potential to destabilize financial markets.”
When asked about Afolami’s comments, a government spokesperson told POLITICO: “The approach to enforcement investigations is a matter for the FCA. However, we are of course engaging with both the FCA and the industry as the proposals are developed. This is, in particular, to ensure that any impacts on competitiveness are properly considered.”
An FCA spokesperson said it was “actively engaging” with government and industry and “welcome[d] all feedback” on its consultation on the plans, which closes Tuesday.
Unfairly tarnished
The FCA is feeling the heat over its proposals since it announced them in February. Peers in the House of Lords warned individuals would have their reputations “unfairly tarnished.”
According to separate minutes seen by POLITICO, following a meeting with the City’s main insurance lobby group, companies believe the regulator is “appearing more conciliatory” after widespread pushback, and there is a sense that it “may have overstepped.”
Despite displeasure at the highest level of government, the City regulator can still shun Sunak and Hunt as it is an independent body.
But the latest government intervention echoes previous attempts by ministers to overrule independent regulators. Former Prime Minister Liz Truss sought to use her premiership — which lasted only 49 days — to exert more government influence on financial policymaking.
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