Bank of England Governor Andrew Bailey said financial regulators should be able to name companies under investigation if needed to protect consumers, after criticism from the industry and politicians who fear it might stigmatise innocent firms.
The Financial Conduct Authority - which Bailey headed before leading the BoE - has proposed naming companies it is investigating early on, if in the public interest, as opposed to the current practice of only doing so after a probe.
The plans have triggered widespread opposition from the financial sector and finance ministry.
The FCA says it would improve deterrence, but firms worry that what they view as "naming and shaming" would dent their share price and reputation, even if they turn out to be innocent, as investigations can last months or years.
Bailey said his experience at the FCA, including a long-running probe into bad pension advice for former steelworkers, had taught him that consumers could come to harm if they were not allowed to know a company was under investigation.
"If an investigation is going on - and the nature of these things is they can take time - and nothing can be said about that, then the risk is obvious that some misselling ... to consumers is going on," he said at a news conference.
The FCA on Wednesday told lawmakers it had made no final decision as it considers the "stern" feedback and what criteria it could use for naming a company early.
Financial services minister Bim Afolami said on Wednesday the FCA should focus on its core role of keeping markets orderly and a secondary goal of boosting Britain's competitiveness as a destination for international investors.
Bailey said the interests of financial firms needed to be weighed against those of consumers.
"We need to get back to how we can reconcile those two potentially conflicting principles, rather than in a sense say (to the FCA) 'you can't do this, you can't do that'," Bailey said.
