Some 16 trade associations have asked chancellor Jeremy Hunt to intervene over the FCA's 'name and shame' proposals, saying they would "have an unduly negative impact on the reputation on firms".
The organisations, including Pimfa and the City of London Corporation, said in a letter that the regulator's plans would put UK financial services at a serious disadvantage compared to its rivals and the FCA should find other means for achieving its transparency and efficiency goals.
The letter, seen by FT Adviser, stated: "At present there is no other G7 country that currently takes the approach on enforcement, that the FCA is proposing.
"This would have real and tangible consequences as investors are likely to be dissuaded from considering the UK in future, diminishing our attractiveness to business."
The letter added the proposals have raised particular concern at executive level, including at American-headquartered firms, which given there was no equivalent situation in the US, would put the UK at a distinct disadvantage.
The signatories were responding to CP24/2, Our Enforcement Guide and publicising enforcement investigations–a new approach, which focuses on identifying firms at the outset of an investigation, using a 'public interest' framework.
Under current rules, publicity over naming firms happens at a later stage, when the FCA is about to publish a warning notice, and enters into a discussion with the said firm, which can put its case and argue against naming it in the document.
Under the new proposals, the FCA will decide whether to name firms at the outset, giving these firms 24 hours' notice, and the decision will be based on various metrics driven by public interest factors, such as whether it will draw out whistleblowers or protecting consumers.
The letter added: "The FCA highlights that UK regulators covering other sectors publicly announce when investigations are taking place. However, the intense international competition that the financial services sector faces, and the fact that it is already heavily regulated, needs to be taken into account.
"Ofcom's approach is still under consultation and Ofgem is the price regulator of a monopoly occupied by a small number of firms (and even then does not announce all its investigations). The comparison is therefore unfair and misleading."
In conclusion the letter said: "We should like to highlight that it is rare that the industry has been able to come together so comprehensively in opposition to a proposal."
Kickback from industry
Last week the House of Lords Financial Services Regulation Committee wrote to FCA chief executive Nikhil Rathi asking him to pause the consultation, as it feared the proposals could risk the integrity of the financial services sector.
In response, the FCA wrote back at the end of last week saying: "We have seen no public statements by firms... that our investigation caused them a material permanent commercial impact, for example through net loss of clients not returning following closure of the investigation."
