Fund groups would fear Haldane at the FCA

Dan Jones

After two-and-a-half years in charge, it’s goodbye to Martin Wheatley this week. The FCA chief executive will be stepping down on September 12, having been unceremoniously ousted by the chancellor this summer.

Mr Wheatley certainly divided opinion – his tough approach to the banking industry, perceived lack of familiarity with advisers, and the closed book fiasco ensured that. But let’s look forward, not back.

The government is only now beginning its search for a successor, but the Bank of England’s Andy Haldane has reportedly already entered the frame as a prime candidate.

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Mr Haldane is a very different contender to the FCA insiders whose names have also been mentioned in relation to the role. Currently chief economist at the BoE, he made his name as the central bank’s executive director of financial stability from 2009 onwards.

To this end, I’d imagine appointing Mr Haldane wouldn’t exactly bring back onside the advisers who complained that Mr Wheatley never got to grips with their industry. The Bank of England man’s specialism is macro-prudential policy, not retail financial services.

But to my mind it’s fund groups that have the most to fear from the appointment of Mr Haldane. A speech he gave to the industry last April entitled ‘The Age of Asset Management’ may appear fund-friendly, but the reality was rather different.

Describing asset managers as “special”, Mr Haldane made the case for giving the sector the kind of regulatory scrutiny that is typically only reserved for banks. He argued fund groups could pose a threat to financial stability.

There’s been a lot of talk in the subsequent year and a half about what exactly regulators will or can do to clamp down on the industry, but asset managers’ intensive lobbying means some proposals are already being scaled back.

The Financial Stability Board, a global regulator, indicated this summer that it is abandoning a plan to designate fund groups as systemically important – thereby sparing them from significant restrictions.

In the UK, meanwhile, the Bank of England’s Financial Policy Committee (FPC) – of which Mr Haldane is a member – has been gathering evidence over the past six months on how funds manage liquidity, with its findings to be published later in September.

This work is “investigative” in nature, which means the FPC is leaving the ball in fund groups’ court for now.

This state of affairs may not last for long if Mr Haldane ascends to the top job at the FCA. His start date would probably coincide nicely with the regulator’s big market study into the asset management industry, due to commence in early 2016. I’d wager fund houses will be hoping they don’t have to renew acquaintances in the new year.

Dan Jones is editor of Investment Adviser