(Bloomberg) — Chancellor of the Exchequer Jeremy Hunt has warned the UK’s financial watchdog over its plans to name firms it’s investigating at an early stage, a rare political intervention against Britain’s top finance regulator.
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“I hope the FCA re-look at their decision,” Hunt said in a statement, following a backlash in the industry against the FCA’s “name and shame” proposals, which it has said would boost transparency and deter misconduct. Hunt’s comments were first reported by the Financial Times newspaper.
Hunt’s words mark an unusual public pressuring by a senior politician of the Financial Conduct Authority, which operates independently of the government. Prime Minister Rishi Sunak’s administration is currently trying to push measures that would revitalize the UK equity market and lift economic growth, with half an eye on a general election due later this year.
The FCA has defended its naming and shaming plans in the face of criticism, saying the proposals are timely and firms and consumers would benefit from knowing which issues are in the watchdog’s sights.
But a House of Lords panel earlier in April said identifying the subjects of investigations “risks the overall integrity of the market” and would have a disproportionate and unwarranted impact on companies and their share prices. Critics of the FCA’s plans also say they are in tension with the regulator’s new secondary duty to foster the international competitiveness of the UK economy, a duty which was legislated for by the Tories last year.
The naming and shaming plan “doesn’t feel consistent with that new secondary growth duty that they have,” Hunt said. “How you stimulate growth is different sector by sector so I think it’s completely reasonable to name and shame a failing water company which has outrageous amounts of leaks. But I think in a financial services context it’s different.”
Responding to Hunt’s comments, the FCA said its plans are still at the stage of consultation.
“We embrace our secondary objective to facilitate international competitiveness and growth alongside the primary objectives given to us by Parliament to protect consumers, market integrity and effective competition,” the FCA said in a statement. “We will listen carefully to the extensive feedback we have received, including from Government as we reflect on our next steps.”
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