Andrew Bailey faced criticism on several fronts when he appeared at the July 2019 Financial Conduct Authority (FCA) Public Meeting. The regulator’s chief executive has come under fire over his organisation’s handling of a mini-bond firm’s collapse, its perceived inaction against the re-structuring division of a major bank and its supervision of a prominent fund manager.
Aside from this, he chose his Public Meeting speech to highlight how the FCA seeks to serve the public interest.
Mr Bailey began by mentioning Brexit, and said that:
“Our priority has been to ensure that, whatever the time or manner in which [Brexit] occurs, consumers are protected, and markets are prepared as far as possible – so we’ve been undertaking contingency planning for the full range of outcomes.”
He added that the FCA had 320 staff who were, in some way, involved in preparing for the UK’s exit from the European Union. Earlier in the year, when an exit date in March was on the cards, some 450 staff were working in this area.
Three of the FCA’s recent priorities include high-cost credit, pensions and the culture of firms, and he had something to say about all of these at the Public Meeting.
Regarding consumer credit, Mr Bailey made reference to the new cap on rent-to-own pricing and said that this measure was saving consumers £23 million per year. He added that the previous price cap – on payday and other short-term lending – was already saving the UK population £150 million per year.
Turning to pensions, the FCA chief executive commented on the ‘investment pathways’ model the regulator is developing. These pathways are designed to assist consumers who do not take formal financial advice to make the right decisions on how to access their retirement savings. Mr Bailey also spoke of his continued desire to improve the suitability of advice given by firms on transfers out of occupational schemes.
Regarding organisational culture, Mr Bailey said that, come December 9, all authorised firms will be subject to the Senior Managers & Certification Regime, and that this will create “clear lines of accountability between a decision made and the senior manager who made it.” He also said of the culture within authorised firms:
“It is a central consideration for our supervisors, who look at drivers of behaviour, staff incentives and governance arrangements in their day-to-day interactions with firms.”
Additionally, on this subject he spelt out that simply following the FCA’s rules to the letter may not always deliver good consumer outcomes, and that sometimes firms need to think about how their actions will affect their customers. His comments here were:
“Any organisation that prioritises being within the rules over doing the right thing will not stand up to scrutiny for long.”
Mr Bailey then made it clear that the FCA is prepared to take action against firms and individuals who do not act in customers’ interests and observed that his organisation took enforcement action against 265 firms in the most recent financial year. This included 16 financial penalties totalling £227.3 million.
The next area where Mr Bailey suggested that he had secured better protection for consumers was the extension of the Financial Ombudsman Service’s jurisdiction. The independent complaints adjudication body can now award compensation of up to £350,000 per case and it can now consider a wider range of complaints made by small and medium sized enterprises.
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