The City watchdog is cracking down on leaks to the media ahead of price- sensitive news, as part of its efforts to curb market abuse.
The FSA's Market Watch newsletter released on 24 September, targeting both regulated (listed companies; investment banks) and non-regulated (PR consultancies; law firms) businesses, stated: 'Leaks ahead of announcements threaten market integrity.
Strategic leaks - designed to be advantageous to a party to a transaction - are particularly damaging to market confidence and do not serve shareholders' or investors' wider interests.'
The document called for a 'stricter culture' to counter this issue and warned of possible rule changes if it did not see an improvement.
Andy Berry, head of City and investor comms at Fishburn Hedges, said: 'This is going to raise the bar for some PR practitioners. We will undoubtedly come under increasing scrutiny and our judgement and particularly market judgement will be ever more important.'
Tony Langham, MD of Lansons Communications, added: 'The FSA has acknowledged what we know happens, which is that senior people close to transactions leak information when it is to their advantage.
'It is logical to think the more this carries on, the closer the FSA will come to taking action.'
The FSA has advised firms to ensure all contact with media should be via its dedicated comms resources and that PR professionals should record telephone conversations as a matter of course.
One senior agency source noted that the prospect of City PR firms recording all contact with journalists could be damaging to the media's ability to scrutinise the City, as business journalism relies on the candid exchange of information and off-the-record briefings.
However, Bobby Morse, MD of Buchanan, argued that 'good communicators will still be able to communicate' regardless of whether the FSA chooses to regulate interaction with the media.
'It is our job to give journalists guidance and provide them with a steer, but that does not mean breaking disclosure rules. We have to err on the side of caution and adhere to exactly the same rules the City is governed by.'
Langham also noted that, if regulation were to come into force, there might be residual benefits for the PR industry. 'Regulated business is always more expensive than unregulated business,' he said.