The new Financial Conduct Authority will be able to publicise details of firms and individuals subject to enforcement action without notifying them first.

The decision was revealed in the latest report on the draft Financial Services Bill which sets out how the FCA and Prudential Regulatory Authority, replacements for the FSA, will work.

The action will mean details of the enforcement action can be made public before the investigation is complete.

Currently, the draft text proposes the FCA should consult the firm or individual before any publication of the enforcement action but the FSA felt this should be removed.

If the proposal was not changed the FSA was worried it could lead to ‘satellite litigation’ where firms sought injunctions to stop the information being made public.

The report by members of the House of Lords and House of Commons states: “Requiring the FCA to consult could seriously undermine the effectiveness of this new power. The fact the FCA will not be publishing the warning notice itself, but only the fact it has issued one, and the fact that it will need to take into account a number of considerations in deciding what to publish should provide sufficient safeguards.

“We recommend the requirement to consult before disclosing the fact a warning notice has been issued should be removed from the Draft Bill. However, we do think it important the FCA has the discretion to weigh the relevant factors and decide which set of interests listed in the Bill (fairness, potential to be prejudicial and potential for detriment to financial stability) are best served by disclosing or not disclosing a warning notice has been issued.”

However, it suggested the FCA should publish a guide for firms as to how it will exercise discretion regarding disclosure that a warning notice has been issued.