The government has asked the Financial Conduct Authority (FCA) to be more transparent in its supervision and enforcement actions, in a review released yesterday.
The review, which looked at enforcement decision-making at the FCA and Prudential Regulation Authority (PRA), asked the regulators to publish more information about their criteria for starting investigations, approaches to referring cases from supervision to enforcement, and their co-operation with each other.
It was launched in May amid concerns over fairness, independence and transparency.
The review recognised the FCA's efforts to be transparent by publishing information about enforcement outcomes and referrals following thematic reviews.
The FCA should publish information following thematic reviews to explain why certain cases were referred for investigation but others were not
But the government said more can be done to ensure the strategic purpose of enforcement is appreciated by the industry.
It asked for greater transparency around the use of supervision and enforcement tools and suggested "there appears to be no reason why general information [about thematic reviews] cannot be provided".
The report recommended both regulators explore how information might be provided better relating to enforcement outcomes and early interventions.
Furthermore, in its annual report, the FCA should "clearly state the enforcement action that it has taken - whether opening investigations or formal outcomes - in priority areas," the report said.
"The FCA should also publish information following thematic reviews, to explain - generally, and without identifying firms - why certain cases were referred for investigation but others were not," it added.
Chancellor George Osborne said: "The recommendations will enhance the FCA and PRA's capacity to deal with misconduct or tackle threats to financial stability swiftly, fairly and robustly."
The FCA responded by saying: "Enforcement is one of the regulatory tools at FCA's disposal. It is important that people have confidence that it is used fairly, effectively and efficiently and we welcome this comprehensive review and recommendations which will serve further to strengthen our approach."
The government's other recommendations included:
- A new sign-posted procedure to access the Upper Tribunal so that those who wish to access it can do so directly.
- A regular independent review of the regulators' settlement processes.
- Measures to enhance the accountability of the FCA and PRA's decision makers, including by publishing annual reports and increasing their accountability to Parliament.
- A removal of penalty discounts where those being investigated delay settlement.
- Steps to encourage those being investigated to make early admissions to resolve cases more quickly.
- More constructive communication between investigators and those being investigated, with greater senior involvement by the regulators.
