Millions kept in the dark over City watchdog's mystery probe: FCA defends name and shame plan

Millions of UK consumers are in the dark over a mystery firm being probed by the City watchdog because of rules that prevent it being named, MPs were told yesterday.

Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), revealed the investigation was under way as he defended proposals to lift the veil of secrecy.

Rathi is at war with ministers, including Chancellor Jeremy Hunt, and the financial sector over plans to make it easier for the FCA to name companies it is investigating.

His remarks came hours after City minister Bim Afolami attacked ‘naming and shaming’ and a plan to impose equality quotas.

‘The regulators need to… stop doing things like that,’ Afolami told a conference.

Secret probe: FCA chief exec Nikhil Rathi (pictured) is at war with ministers and the financial sector over plans to make it easier for the FCA to name companies it is investigating

Rathi defended naming and shaming amid suggestions by MPs on the Treasury select committee that it was ‘bonkers’ and damaged UK global competitiveness.

He talked of a long investigation into a firm.

Rathi said: ‘That is the kind of case where we might think that we would want to confirm an investigation is under way.

The concern would be there are several million consumers using this firm. We are investigating it and have had discussions with this firm for three years.’

Rathi said the case did not meet the threshold for naming, which can only be done under ‘exceptional circumstances’.

The FCA would change this so that it can identify companies that it is investigating.

Car loan refunds 

FCA chief Nikhil Rathi said it is considering redress for thousands of consumers overcharged for car loans.

The FCA has been looking into claims related to motor finance between 2007 and 2021 and it may force companies to pay compensation. He said it would take next steps in September.

The probe has prompted Lloyds Banking Group to set aside £450million and analysts estimate the bill could be £16billion – drawing comparisons with the payment protection insurance (PPI) scandal that cost lenders £50billion.

But Rathi told MPs: ‘I think it’s unlikely we’re going to find nothing to report, but I also would not want the committee to think that this is going to be on the same scale as PPI.’

Rathi said victims of the British Steel Pension Scheme scandal missed out because of secrecy.

‘We had intelligence about problematic financial advisers and they were being investigated,’ he told MPs.

‘Steel workers in Port Talbot were not aware we were investigating – they were calling our contact centre.

‘All they got was the information this firm was on the register, nothing else was disclosed. They then took advice and potentially lost their life savings.’

Rathi said the FCA would review the reaction to its plans. FCA chairman Ashley Alder said: ‘We weren’t expecting such a stern reaction.’

A coalition of 16 trade associations has written to Hunt to object. He has urged a rethink.

Afolami, at an FT crypto summit, said the FCA should ‘stop focusing on things that are non-core, like naming and shaming or this diversity consultation, and focus on conduct and making sure the system works’.

He added: ‘It is perfectly legitimate for the Chancellor or anybody else to say we’d like you to think again.’