Officially, Nikhil Rathi’s appearance at the Treasury Select Committee was a chance for his appointment as FCA chief executive to be formally approved. In reality, the session was a chance to get some insight regarding what the FCA might be like when he takes over later this year.
Newly appointed Financial Conduct Authority chief executive Nikhil Rathi has signalled that cracking down on financial promotions will be one of his priority areas.
Mr Rathi will not take up his new role until October, but he has already been quizzed by MPs at the Treasury Select Committee. The session also allowed the Committee to formally approve the Chancellor’s proposed appointment of Mr Rathi to the role.
During the session, Mr Rathi promised to the Committee that he will “get tougher” on the oversight of financial promotions. At present, the FCA supervises the marketing of financial products, even if the products themselves might not be regulated. Nevertheless, this did not prevent 12,000 small savers losing £236 million through investing in high-risk unregulated minibonds in one recent high-profile scandal.
Mr Rathi indicated that three of the key areas of focus at the FCA will be:
- A strong data strategy
- A joined-up regulator that functions well
- Diversity of thought
Regarding the first of these, the fact that the FCA is seeking to make better use of data to improve the way it regulates firms has been reported in the media as one of the reasons why Mr Rathi got the job ahead of some of his rivals.
Concerning the last of these, Mr Rathi indicated that the FCA is prepared to use strategies such as ‘no name CVs’ when recruiting.
He also mentioned two well-publicised areas in the mortgage sphere.
Regarding mortgage prisoners, Mr Rathi said:
“On the mortgage prisoners, I know there’s been some progress with respect to affordability tests and enabling consumers to understand they can switch. But there remain some issues to resolve, particularly the take up by banks of the new affordability freedoms that the FCA has put in place and I will look to take that as a priority.”
On the subject of payment holidays, he said:
“I understand that … there is considerable discussion about how to make sure that credit impairment doesn’t result from taking holidays for legitimate reason, but also that the integrity of the credit database is maintained so that people do not take on unsustainable debt.
“If they’ve taken holidays, debt will accumulate, and they may not be in a position to take on more debt with a new lender and that’s a difficult balance to strike.”
Asked by Rushanara Ali MP how he would like people to see him, Mr Rathi said:
“I haven’t applied for this job to be liked. It’s not a job I think you can take if you want to be liked.
“I wouldn’t want to define myself as being feared either. I would like the FCA to be defined as tough, assertive, thoughtful, decisive, and working with pace and agility and proactivity.
“I would hope that those who have worked with me in the past would describe me as an inspirational leader, someone who leads by example, empowering the senior team.”
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