29Nov

FCA chief looks to the future during his first speech, and speaks about the FCA’s pandemic response during the regulator’s podcast

Nikhil Rathi has given his first speech since becoming the Financial Conduct Authority’s new chief executive. His address on November 12 at Mansion House, the Lord Mayor’s residence in the City of London, was entitled ‘Facing the future – challenges and priorities for the FCA’.

He began by commenting on the measures being taken to prevent harm in the face of various challenges being faced by the FCA. These included:

  • The extensions to the payment deferral periods for mortgage and credit card borrowers, and the tailored support to be provided for those who have already benefitted from deferrals
  • The measures the FCA will take to minimise harm to consumers and the wider financial system when firms fail – here Mr Rathi conceded that “we can’t intervene to stop firms from failing in the face of economic distress and sadly we do expect a significant number of regulated firms, particularly smaller firms, to fail in the months ahead”
  • Temporary regimes that will allow around 1,500 overseas-based firms to continue operating in the UK once the Brexit transition period ends

The FCA chief said some of the biggest changes affecting financial services were:

  • Widening gaps between the generations in terms of wealth and opportunity
  • Increased financial vulnerabilities for many
  • The growth of big data, machine learning and artificial intelligence, which gives rise to new ethical and regulatory questions, along with great potential for innovation
  • Given the continued low interest rates, the incentives for consumers to invest in high risk investments, especially when they are being encouraged to take more responsibility for their own investment decisions

Mr Rathi concluded by saying the FCA hoped to make better use of data to respond to these challenges:

“With around 60,000 regulated entities to supervise, we need to make further investments in a more digital and data-enabled approach. This should allow us to intervene sooner to reduce harm to consumers and markets. And smarter collection and use of data, backing faster intervention, should result in a lower total cost of regulation for well-run financial services firms.

“The data strategy published earlier this year outlined our ambitious vision to harness the power of data and advanced analytics to support our Mission, and to ultimately transform how we carry out financial regulation in the UK. We have seen the benefits of this during the crisis and will accelerate this work in the coming months.”

Mr Rathi has also addressed firms via the FCA’s ‘Inside’ podcast series, where he spoke about the regulator’s pandemic response. Issues covered here included:

  • The increase in the number of vulnerable customers
  • The rise in the number of payments being made digitally
  • Mitigating the risks to consumers and the economy when firms fail
  • The need to be increasingly vigilant as scammers seek to take advantage of the pandemic

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article