The Financial Conduct Authority has promised to “engage further with industry” over its controversial plan to ‘name and shame’ companies under investigation.  

The City watchdog outlined proposals earlier this year to release the name of firms under investigation if it believes it is in the public interest.  

But earlier this month the Chancellor and a range of City bodies called on the regulator to scrap the plan, saying the measure could hit the valuations of firms and “destabilise financial markets”.        

The FCA’s executive director, markets and executive director, international Sarah Pritchard said she recognised the move was “a sensitive and emotive issue,” in a speech during TheCityUK’s City Week this morning.  

Pritchard added: “I know there have been concerns about our proposals to announce the fact of some enforcement investigations earlier on in the process where it is in the public interest to do so.   

“We recognise that this is a sensitive and emotive issue so we will take time to consider the feedback, engage further with industry and explore thoroughly the concerns and evidence shared with us, with an aim of reaching a broad consensus.  

“Be assured that we do listen. We are evidence-led so will only act where a failure to do so would cause harm to consumers and undermine the integrity of our markets.”  

She pointed out: “Input from the market as we design our future-facing rules is key to avoiding unintended consequences or worse, taking a hammer to crack a nut.   

“Confidence in the market is essential, underpinned by a clear regulatory regime.”  

The FCA says the move will boost transparency, encourage whistleblowing and increase the deterrent effect of the watchdog’s probes, which on average last three to four years.    

Earlier this month, FCA chair Ashley Alder told the Treasury Committee: “In truth, we weren’t expecting such a stern reaction that has come from the industry.”  

The move by the regulator comes after it and the Prudential Regulation Authority were given new competitiveness and growth objectives by ministers last year.        

But earlier this month, in a rare intervention in regulatory affairs, Chancellor Jeremy Hunt said: “Last year the law changed in the financial services market and [the FCA] 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 with that new secondary growth duty that they have.”  

Also, earlier this month, it emerged that 16 finance trade bodies — including UK Finance, The Investment Association and TheCityUK — wrote to the Chancellor asking him to intervene.      

“Firms believe that the proposals will have a negative impact on their valuation, could put at risk the wellbeing of individuals, and have the potential to destabilise financial markets,” the associations said in the letter to the Chancellor.    

Other UK regulators — such as those in competition, water and energy — often name firms that are under investigation before deciding on whether they have breached any rules.    

However, this measure is rarely used by international financial services regulators such as the US Securities and Exchange Commission and Germany’s BaFin.