The Financial Services Consumer Panel (FSCP) has told peers they should amend legislation to make it possible to publish warning notices against firms and individuals without consulting them.
One of the most controversial measures currently being proposed in the Financial Services Bill will allow the Financial Services Authority successors to publicise that firms or individuals are the subject of enforcement action before a decision has been made.
However, the influential FSCP has insisted the new powers should be even stronger and do away with the need to consult with the firms or individuals first.
"There is a danger that this creates ambiguity and delays in publishing information which is beneficial to consumers," it said.
In this respect, the term used in the Bill of issuing a "Warning Notice" could be misleading and may be seen as the equivalent to a "formal charge".
However, it added: "The panel does not think that the reputational damage from a Warning Notice is any different from that experienced by anyone else who is subject to prosecution and subsequently acquitted."
Opponents of the publishing of warning notices have included the FSA's Small Businesses Practitioner Panel, which suggested it could cause irreparable damage to the reputation of firms, even if they are exonerated.
Having already passed through its initial House of Commons stages, the Financial Services Bill will today get its second reading in the House of Lords, before moving on to the committee stage.
It is expected to gain Royal Assent by the end of this year, with the changes set to come into effect in early 2013.
Lack of innovation for solutions
Some 2,000 consumers affected
Achievements, charity work and other happy snippets
Appetite has suffered since Brexit vote
'Failure to pay attention can result in enforcement'