The Government will be able to stop the FCA from issuing early warning notices if it does not use the power responsibly or it is not in the public interest to publish the information, as part of extra safeguards in the Financial Services Bill.
Under Government proposals, the FCA will have the power to publish details of firms or individuals that are the subject of ongoing enforcement investigations without notifying them.
Speaking in the House of Lords debate on the Financial Services Bill yesterday, Treasury commercial secretary Lord James Sassoon said the Government will amend the bill as an extra check on the FCA.
He said: “Although we believe this is an important power, the question is will it be exercised properly and is there any further protection needed because we are taking a bold new step in an untested direction and it has to be used responsibly.
“For that reason, and listening to this debate, I can say that we intend to return to this issue at report stage to make provision for the Government to retain the power to repeal the early warning notices power if at some point in the future the power or use of it is contrary to the public interest.”
Lord Sassoon said the Government is not backtracking and its commitment to early warning notices remains “extremely firm”.
He said: “It does not weaken in any way our commitment to this policy or our belief in any way that if used responsibly, which we expect it to be, then it forms a vital part of the FCA’s regulatory toolkit. But I hope that it provides some reassurance that we will be mindful that the power is used in a responsible way in the interest of the greater good and we will act if that is not the case under the power we intend to bring through at report.”
Tory peer Lord Howard Flight, who tabled the amendment to remove early warning notices from the bill, agreed to drop it but said he may return to it at a later date if he is not satisfied with the details of the Government’s response.