Press Release

IMA questions Transperancy as a Regulatory Tool

5 September 2008

Responding to the FSA’s Discussion Paper “Transparency as a Regulatory Tool”, the Investment Management Association (IMA) has called for further consultation and analysis before the FSA publicly discloses further firm-specific information.  While transparency can be useful and is in line with Treating Customers Fairly, the value it will offer needs to be carefully balanced against what it will cost and any unintended consequences it might have.

By proposing to publish information such as firm-specific complaints data and details on the use of its supervisory powers the FSA runs the risk of simply publishing for publishing’s sake rather than achieving any real value for the end consumer.  IMA also has specific concerns in relation to proposals to publicise supervisory notices with regard to changing a firm’s permission to do something.  Publicising these could be viewed as “public censure” on a firm without giving it the due process it should have under the Financial Services and Markets Act.      

Commenting, Guy Sears, Director – Wholesale at IMA said:  “In principle, transparency can serve a purpose; certainly IMA will support measures that better inform clients. But publishing large amounts of data is not the same as informing clients about the choices they need to make. Financial capability and investor confidence should remain priorities for FSA above mere transparency. We would urge the FSA to undertake further analysis as the research in the Discussion Paper itself highlights that disclosure rarely achieves what is intended.”