The boss of Britain's financial watchdog will be called to explain in parliament why he has not paused work on the regulator's 'naming and shaming' proposals, the group of UK lawmakers that had requested the break said on Thursday.
The Financial Conduct Authority (FCA) has proposed naming companies it is investigating if there is a wider public interest, a step it says would increase its deterrent effect. Currently, it typically only names a company after a probe has been completed.
The House of Lord's financial services regulation committee had asked FCA CEO Nikhil Rathi to pause work on the plans, saying they could unfairly tarnish companies that turn out to be in the clear after what can be lengthy investigations.
Last Friday the FCA, which is independent of government, set out a detailed 29-page defence of its proposals and indicated it would continue working on them.
"The FCA response failed to directly address our concerns and did not commit to pausing implementation until after our committee had properly scrutinised its proposal. This isn’t acceptable," the committee's chair Michael Forsyth said in a letter to Rathi, made public on Thursday.
The committee said it will launch a short inquiry into the FCA’s proposal, with Rathi being invited to appear before it. Rathi has also been asked to clarify the FCA's position on the request to pause work on the proposals, Forsyth said.
The FCA had no immediate comment.
In a rare public intervention, Britain's Finance Minister Jeremy Hunt urged the FCA on Monday to reconsider.
"On the FCA, last year the law changed in the financial services market and they have a secondary growth duty. On the basis of that I hope they re-look at their naming and shaming decision, because it doesn't feel consistent," Hunt said.
A welter of financial industry bodies have said the proposals could harm the sector's global competitiveness.
The opposition Labour Party, tipped in the polls to win a general election expected in the second half of the year, said the FCA should take into account responses from its public consultation and the sector's views on the proposals.
"There must be an appropriate balance between enhancing the integrity of the sector while protecting the international competitiveness of the UK," a Labour spokesperson said.
