MFA warns FCA’s investigation publicity plan threatens UK markets

London, UK – MFA urged the Financial Conduct Authority (FCA) to withdraw its revised proposal to publicly name firms under investigation in a letter submitted today. The FCA’s revised approach retains the same fatal flaws as the original proposal and introduces new risks. MFA requested the FCA withdraw its original proposal in an April 2024 comment letter. 

“The FCA’s revised proposal remains flawed and will harm UK firms, investors, and markets,” said Bryan Corbett, MFA President and CEO. “Naming a firm before any wrongdoing is established risks severe reputational damage, destabilising firms, and undermining the attractiveness of the UK as a global financial centre. The FCA should not pursue this misguided approach.” 

MFA appreciates the FCA’s efforts to address concerns with the original proposal by introducing additional considerations and notice periods. However, these modifications leave unchanged the flawed fundamental framework of the original policy. The proposal remains unworkable and actually creates systemic risk without a clear benefit to investors or markets. It would deter firms from operating in the UK, undermine confidence in its regulatory environment, and ultimately damage UK growth and competitiveness, weakening its standing as a global financial centre. 

The letter highlights key concerns with the revised proposal, including: 

• Severe reputational harm – Even with additional notice periods, naming a firm before an investigation is complete could trigger investor redemptions, disrupt business relationships, and impact market confidence. 

• Damage to UK markets – The proposal introduces vague and subjective considerations that could disrupt market confidence and the UK’s standing as a financial centre. 

• Subjective and undefined criteria – The proposal grants FCA staff broad discretion to define, implement, and interpret when to publish the existence of an investigation, increasing uncertainty, inconsistency, and regulatory risk. 

• Lack of cost-benefit analysis – The FCA again has failed to conduct a proper cost-benefit analysis, ignoring the proposal’s broader economic impact. 

• Existing FCA authority is sufficient – The FCA already has the ability to publish investigations in extraordinary circumstances. MFA urges the FCA to rely on this authority rather than introducing vague and expanded powers. 

Read the full comment letter here. 

The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.

About MFA

Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.