The House of Lords committee has told the Financial Conduct Authority to withdraw its “name and shame” program, which will see the city regulator under investigation if it is considered in the public interest.
The Peers Financial Services regulatory committee added that the FCA’s attempt to consult a company on its proposal was a “huge failure.”
In a report on the move, the committee said the regulator “has not brought a compelling case, namely the proposed shift from the current policy of publicly announcing a public investigation of the company before ending in a “special case” Before.”
It added that the FCA “interacting with stakeholders during the development stage of the proposal can avoid a lot of unnecessary controversy.”
The peer told the watchdog that “if no acceptable balance is found, the advice is removed between the potential benefits of achieving consumer protection and the potential risks of managing the company, individual and market stability”.
The report comes after the FCA made “significant changes” to the program in November, which includes faster investigations, longer notices on companies named companies and stricter guarantees for naming businesses under investigation ensure. Its plan was first proposed at the beginning of last year.
However, regulators continue to object to their plans, which they say will undermine the valuation and employees of companies that have not been found guilty of misconduct.
The plan also shows that Prime Minister Rachel Reeves refuted the repeated comments, who said she does not want regulators not to hinder competition in the financial services sector.
The Chairman of the House of Lords Financial Services Regulatory Committee Drumlean said: “The FCA has the responsibility to present a strong, clear case about why this fundamental change is needed and that it has failed to do so.
“Less than 18 months ago, the FCA said it was aware that disclosures of law enforcement investigations could improperly damage the company’s reputation if the investigation did not confirm the FCA’s concerns.
“We simply can’t understand the FCA’s transfer in such a short time.
The peer added: “The FCA told us that the average duration of the investigation is about three to four years, and in 56% of cases, no further litigation was taken.
“If it makes a proposal for past performance, it could mean half of the companies and those involved will unnecessarily and unfairly damage their reputation. This is unacceptable.”
The FCA will “consider” the peer report as its board decides whether to plan ahead and make recommendations in the first quarter of this year.
Watchdog said: “We recommend more transparency into our law enforcement investigations to improve accountability, public confidence and information for consumers and companies.
“We should better handle initial consultations, such as early participation in proposals.
“As the committee acknowledged, we received feedback on board. We were extensively involved in the industry and revised our recommendations.
“When we decide on the next step in the proposal, we will carefully consider the committee’s report, as well as other feedback we consult.
“We also welcome the recognition that our efforts to increase the pace of the investigation are working.”
