LONDON, May 8 (Reuters) - Britain's Financial Conduct Authority should focus on its core role of keeping markets orderly, and not send the wrong signals to investors with 'naming and shaming' proposals, UK financial services minister Bim Afolami said on Wednesday.
The FCA has faced widespread backlash against its proposals to name companies it is investigating early on in a bid to increase deterrence, rather than after a probe has been concluded. It has also proposed additional reporting requirements on firms to improve diversity among employees.
The FCA also has a new, secondary remit to aid the financial sector's global competitiveness, but critics, including the finance ministry, say the 'naming and shaming' proposals appear at odds with this by piling on unnecessary red tape.
"The signal to international investors, and to people in this country, is that the regulator still doesn't get it," Afolami told a Financial Times event.
"When they say they don't have resources sometimes to deal with things, I say 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 properly for consumers and producers," Afolami said.
Afolami has said regulators need to accept a greater level of risk in the system to allow for innovation, but progress on this has been "mixed".
The FCA is independent of government, but is accountable to parliament, and its top officials will appear before parliament's treasury select committee later on Wednesday to be questioned about the naming and shaming proposals.
Afolami said there was no danger of politicising regulators given they operate under the umbrella of parliament, and were not independent in the same way as judges, meaning it was legitimate to ask them to think again on some proposals.
The FCA will issue a report on how it has applied it's new competitiveness objective. (Reporting by Huw Jones, Editing by Louise Heavens, Alexandra Hudson)
