Regulator vows to shield consumers
FINANCIAL CONDUCT AUTHORITY CHIEF CALLS FOR ‘UPFRONT EFFORT’
NIKHIL RATHI, the chief executive (CEO) of Financial Conduct Authority (FCA), last Thursday (27) evening delivered an address in which he spoke about the role of the FCA in a changing regulatory landscape.
Speaking at Lord Mayor’s City Banquet at Mansion House, he highlighted the body’s shifting approach and commitment to “hyper vigilance” to shield the consumer, including through its new consumer duty rules. Rathi emphasised that change begins at the top and that an “upfront effort from firms should mean fewer rules down the line”.
Cheering the diversity that the British society has embraced in the recent times, including choosing a British-Asian prime minister and a mayor of the capital city from a British-Asian background, and noting how it helps businesses or large organisations, Rathi said, “Sam Woods of the Prudential Regulation Authority and I have both spoken about the importance of diversity and inclusion and we are leading joint work on this with industry.
“We know this work matters for good conduct and risk management. As those of us who have run businesses or large organisations know, allowing the best talent to rise to the top also matters crucially for our competitiveness.”
Speaking on the “tide of unprecedented challenges”, Rathi said his two-year tenure at the FCA saw the company rising to the challenge tirelessly.
“I am proud of how my colleagues have consistently risen to the challenge,” he said.
“When I became CEO during Covid, FCA colleagues made sure millions of consumers received enhanced forbearance from lenders and secured over £1.5 billion in business interruption insurance payments for businesses,” he said, adding, “All the while the markets we oversaw proved resilient, paving the way for record capital raising to support recovery.”
Speaking on how they dealt with challenges such as Brexit transition, Covid-19 pandemic, and the ongoing crisis in Ukraine, Rathi said they managed the end of the Brexit transition phase in end 2020 and aimed at replacing emergency pandemic measures with “longer-term, tailored support”.
They were also working closely with the UK government, international partners and firms to carry out sanctions at an extremely short notice days after the Ukraine war started while keeping the core markets operational.
It was also during this period when the FCA was fundamentally reoriented. “Our three-year strategy published earlier this year holds us to account for the first time against specific outcomes and metrics,” the CEO said. “We have bolstered our senior leadership, promoting our top internal talent and bringing in commercial, operational and international experience.
“We have made difficult reforms to our pay and rewards to focus more on collective and individual performance, support career mobility within the FCA and lay the ground for substantial expansion in Leeds and Edinburgh,” said, adding that they were attracting more than 1,000 colleagues in the current year.
Rathi said his company now has greater willingness to take more legal risk, to intervene earlier, and to test its powers to the limits. “This has included the first criminal case against a bank for money laundering failings, securing tens of millions under our consumer redress powers, and imposing the first account forfeiture order,” he said, adding that FCA is investing in and deploying technological solutions to improve efficiency.
The FCA leader also talked about the growing cost of living, saying it has been precipitated by the pandemic and war. He said they already have started engaging with lenders to ensure that they were treating customers properly and stay more vigilant to protecting vulnerable consumers.
“Our survey last week of 19,000 people shows that more expect to struggle in the months ahead. Nearly eight million people are finding paying for the basics a heavy burden – that is 2 and a half million more than last year,” he said.
“We remain ever more vigilant to actors preying on consumers’ vulnerabilities and are intervening at our fastest pace ever against problematic financial promotions, eight times more interventions year to date compared to last year.”
He said FCA has also finalised the consumer duty through its new strategy, and it puts the onus on firms to put good results at the heart of their products and services. “Through our strategy we have finalised our consumer duty – putting the onus on firms to put good outcomes at the heart of their products and services,” he said.