Rathi: "We are always open to simplifying regulation whilst delivering the same outcomes."
Financial Conduct Authority (FCA) chief executive (CEO) Nikhil Rathi has set out the regulator’s role in a changing regulatory landscape, highlighting its shifting approach, as well as its commitment to “hyper vigilance” to protect the consumer including via its new Consumer Duty rules.
In a speech, delivered on Thursday (27 October) at Lord Mayor's City Banquet at Mansion House, Rathi said that an "upfront effort from firms in implementing the Consumer Duty should mean fewer new rules down the line".
He also acknowledged that the "timetables are demanding" and said that the regulator aims to be "pragmatic" in its oversight of implementation.
Given the rising cost of living, he said that the FCA remained "ever more vigilant to actors preying on consumers' vulnerabilities" and that it is intervening at its "fastest pace ever against problematic financial promotions, eight times more interventions year to date compared to last year".
He also highlighted the FCA's data-led regulatory approach, with the regulator "investing in and deploying technological solutions" in a bid to make it more efficient.
In June, the FCA announced that it scans about 100,000 websites created daily to identify those that appear to be scams, and uses advanced analytics and new sources of data helps to identify inappropriate financial adverts. Rathi added that the FCA had "have developed a single view analytics tool to be able to spot where to intervene and when, faster".
He also pointed to the disruptive market events over the last year, such as the default of Archegos, the temporary suspension of the nickel market on the London Metal Exchange and the extreme turbulence in commodity and fixed income markets, including gilts which particularly affected defined benefit pension funds.
He said that the FCA saw "the need for better regulatory and risk reporting and oversight both domestically and internationally" in each case.
"This is something we will be focusing on with our partners," he added.
Shifting approach
Over the last two years, the FCA has "fundamentally reoriented", said Rathi, having added to its senior leadership, made "difficult reforms" to its pay and rewards, and laid the groundwork for "substantial expansion" in Leeds and Edinburgh.
The FCA has hired over 1,000 new colleagues this year, and it has made its gateway "more robust" having "learned the lessons from independent reviews", he said.
Now one in five firms are initially rejected for authorisation compared to one in 14 in the previous year, according to Rathi.
Competitiveness
The CEO also stressed that while the FCA would continue embed competitiveness further in its regulatory approach, it would not compromise on consumer protection, market integrity and competition.
"We are always open to simplifying regulation whilst delivering the same outcomes and streamlining our processes without undermining rigour."
He pointed to the speed with which the regulator reacted to Covid-19, Russia's invasion of Ukraine, the rising cost of living and unprecedented market turbulence, adding: "It is vital that this independence and agility at speed is not undermined by any proposed call-in power."
