Senior managers under increasing FCA scrutiny Publication of warning notices

04 December 2013

Elizabeth Clay, Simona Rainer

A number of concerns were expressed during the FCA's recent consultation around its proposal to publish warning notices at a far earlier stage than it had done previously, namely before its investigation had been concluded rather than at its conclusion. On 15 October 2013, a watered down policy statement (PS13/9) came into effect which took into account these concerns and which appeared to accept that the risk of harm being caused to an individual as a result of early publication of their name would normally outweigh the benefits of transparency for the financial services industry as a whole as well as for consumers.

As a result, under normal circumstances, the details of a warning notice and the name of the firm subject to investigation will be published. However, the FCA will consult with the subject of a warning notice before the notice is published and any representations made by the individual/ firm in question will be taken into account when assessing whether publication should be considered as unfair. The meaning of "unfairness" remains however absent from the Policy Statement. The FCA's normal practice will be to provide the subject with an interim report on any findings followed by a reasonable response period (although there may be circumstances where the issuing of such an interim report may not be appropriate). Whilst it is for the subject to provide "clear and convincing evidence of how that unfairness may arise and how they could suffer a disproportionate level of damage" it is now more likely that the FCA will consider that proof of a significant loss of income will be sufficient to demonstrate a "material effect" on an individual.

Bird & Bird comment:

The revisions to the final policy statement on warning notices have been welcomed within the financial services industry and while it may still be challenging for a subject to provide evidence that naming him/ her would be unfair, the changes are expected to make this less onerous than initially expected.

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