FSA wins over MPs on plans to make warning notices public

MPs have put their weight behind plans for the regulator to be able to publish warning notices about a firm, even before a final decision is made in the case.

In the draft Financial Services Bill, the government proposed a consultation on giving the Financial Conduct Authority (FCA), one of the successors to the Financial Services Authority (FSA), the power to publicise when a warning notice has been issued against a firm.

However, in written evidence to the draft Financial Services Bill Joint Committee, the FSA suggested this power should be given without consultation.

In a report out today MPs on the Committee reveal they have backed the FSA's stance.

Industry figures had warned the Committee publishing warning notices would be the "death" of small firms.

But in its report, the Committee recommend the requirement to consult on the publication of warning notices be dropped.

The FCA should be given "the discretion to weigh the relevant factors and decide which set of interests listed in the Bill (fairness, potential to be prejudicial and potential for detriment to financial stability) are best served by disclosing or not disclosing that a warning notice has been issued", the report stated.

However MPs want the FCA to publish guidance on how it will exercise this discretion.

"This will provide some degree of certainty to firms over how the FCA will treat different cases," the MPs' report said.

Elsewhere the Committee recommend an amendment to the Bill to place a clear demand on firms to act honestly, fairly and professionally in the best interests of their customers.

"The FCA should be empowered to hold firms to account for this and ensure companies address conflicts of interest and the needs that consumers may have for advice and information that is timely, accurate, intelligible to them and appropriately presented," it said.

MPs also recommended that the FCA should have a clearer role in promoting competition.

The FCA's operational objective of "promoting efficiency and choice" should be replaced by "promoting competition, efficiency and choice for the benefit of consumers", the report said.

MPs also want the FCA to be given powers alongside the Office of Fair Trading (OFT) to refer market investigations to the Competition Commission. Consumer bodies should be able to make super-complaints to the FCA, as well as the OFT, it added.

On simple products, the FCA should be prepared to help the voluntary sector identify and certify simple, low cost financial products by providing information and details of their costs, it said.