In just a few days’ time, there will be a new boss at the UK’ s principal financial regulator. Andrew Bailey is to leave his position as chief executive at the Prudential Regulation Authority and will start work in the equivalent role at the Financial Conduct Authority (FCA) on July 1.
The FCA has been without a permanent chief executive since the Chancellor of the Exchequer removed Martin Wheatley from his position in July 2015. For the past year or so, the role has been carried out on an interim basis by the FCA’s former enforcement director Tracey McDermott, who will now be seeking new opportunities.
So what tasks are facing Mr Bailey when he starts work at Canary Wharf, and what can the industry expect things to be like on his watch?
Some commentators have suggested that Mr Bailey will be a less confrontational regulator, considering that Mr Wheatley once infamously remarked he would “shoot first and ask questions later” when supervising firms.
However, Mr Bailey made some hard hitting comments about the way banks act, and the way they are perceived, when he addressed the City Week conference in May 2016.
“Culture has laid the ground for bad outcomes, for instance where management are so convinced of their rightness that they hurtle for the cliff without questioning the direction of travel”, he said, before adding:
“Today, the public perception of banking, and some other areas of finance, remains too much towards the exploitative ‘greed is good’ end of the spectrum. Major changes have occurred since the crisis which have improved behaviour in firms, but public opinion broadly does not recognise these developments and tends to think that nothing has changed.”
According to previous remarks by FCA chairman John Griffith-Jones, one of Mr Bailey’s key tasks will be to review the regulator’s approach to redress schemes in cases of mis-selling.
Mr Griffith-Jones said:
“One of the crucial things Andrew Bailey and the board will look at when he arrives is how we deal with these redresses. How do we get a scheme to begin and end to the satisfaction of everybody that we’re doing a decent job? If you look at PPI or swaps, or other difficult cases, it’s still a work in progress. It’s very easy to start these things, but it seems very difficult to finish them.”
The new Senior Managers & Certification Regime (SM&CR) is still in its infancy – it was not introduced in the banking sector until March 2016, and it will be 2018 before it is implemented in other sectors of financial services. Some commentators have suggested we should expect a high profile scalp early in Mr Bailey’s tenure, where decisive action is taken against a bank boss in order to set an example.
The recommendations of the recent Financial Advice Market Review also need to be implemented. This Review, jointly commissioned by the FCA and the Treasury, is looking at how access to financial services could be improved.
The exact ‘tone from the top’ that Mr Bailey will set remains to be seen. But for now, the rules firms need to follow remain unchanged.
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 the facts, circumstances or legal position may change after publication of the article.