The Financial Conduct Authority (FCA) has made significant adjustments to its initial proposal to publicly identify companies under investigation, following concerns raised by the financial sector.

In updated guidelines released on Thursday, the FCA acknowledged a misstep in its February announcement regarding the plans, admitting it did not adequately inform the industry ahead of time.

The revised framework introduces a more rigorous public interest assessment and extends the timeframe for firms to contest proposed disclosures regarding an investigation. Originally, the authority suggested a mere one business day for companies to respond, a proposal that sparked considerable discontent.

Should the new measures be enacted, the FCA anticipates only a slight increase in proactive disclosures regarding regulated firms. However, they might lead to a potential doubling of investigation announcements from the currently low figures, along with disclosures pertaining to unregulated firms, which are not currently revealed.

Traditionally, the FCA has been reticent to disclose details of investigations into financial services firms. It aims to adopt a more transparent stance, promoting public knowledge of inquiries deemed to be in the public interest.

Although the FCA argued that its approach would align it more closely with other regulatory agencies such as the Serious Fraud Office, the initial plan was met with trepidation within the industry, raising fears that firms could be unfairly ‘named and shamed,’ despite most investigations concluding without further action.

“I want to recognize that we could have communicated our proposals more effectively; they were unexpected for many,” stated Therese Chambers, joint executive director of enforcement and market oversight at the FCA. “We should have clarified our rationale better, enabling a more productive dialogue with stakeholders.”

The new approach will grant companies access to a draft of any impending announcement, providing at least 10 business days to respond. If the FCA decides to proceed, firms will receive the final version of the announcement just two business days prior to its release. This timeline theoretically allows companies to seek legal recourse to contest the announcements.

Additionally, the public interest criteria are set to be revised, with specific emphasis on evaluating the potential impact that a public announcement may have on a company as a vital factor. The FCA will also take into account the likelihood of an announcement significantly undermining public confidence in the financial system or the market.