I wish the new chief executive of the FCA Andrew Bailey well. He’s a seasoned public servant and regulator from the Bank of England’s Prudential Regulation Authority. He is the proverbial safe pair of hands, and few would be ungrateful for that.
After searching high and low for several months – throughout the world, apparently – the FCA (or was it the Treasury, or was it the chancellor? It is not very clear) found Mr Bailey just up the road at the Bank of England where he has been for 30 years.
While I suspect few financial advisers will have heard of him, he comes highly recommended. Bank of England governor Mark Carney said of his colleague: “Andrew is an extraordinary public servant who has devoted his entire professional life to serving the people of the United Kingdom.”
His boss, chancellor George Osborne, was equally gushing, saying: “We have cast the net far and wide for this crucial appointment and, having led the Bank of England’s response to the financial crisis, Andrew is simply the most respected, most experienced and most qualified person in the world to do the job.”
It should be remembered at this point that his predecessor Martin Wheatley, a man admired for his questioning style and thoughtfulness, announced he was resigning back in July 2015. Which begs the question: why did it take so long to find a candidate just a few miles away from the towers of Canary Wharf and why, apparently, did several candidates pull out of the race? Is the role really such a poisoned chalice?
In any event, I am sure Mr Bailey has considered both the pros and cons. My concern is not about the experienced new chief executive of the FCA, who seems a pretty logical choice and at least comes with many years of relevant experience. My main concern is with the board appointments the FCA announced the same day with four new board directors replacing three outgoing directors.
Disappointingly, the much-respected financial planner Amanda Davidson is to move on, at a stroke removing valuable board input from a financial practitioner. I have met Amanda several times over the years and her calmness and insights have always impressed me. To my mind she has always represented the kind of financial planner most people would choose if they could. With acres of business experience, she was not just making up the numbers on the board, she also chaired the important FCA remuneration committee.
Also disappointing was the departure of the fearless consumer campaigner Mick McAteer, an outspoken consumer advocate who has always been a voice for the less powerful in society.
Yes, they were coming to the end of their tenures, but who do we get in their place? Mostly a collection of insiders and ex-politicians. These include Bradley Fried, deputy chairman of the Court of Directors of the Bank of England; Baroness Sarah Hogg, an independent director of the Treasury and former Treasury financial secretary Ruth Kelly.
Admittedly Age UK chief executive Tom Wright CBE is also joining, and his different viewpoint will be valuable, but overall these appointments are a major missed opportunity. Where are the consumer experts, the practitioners, the independent voices? I am not volunteering, by the way, but surely there must have been a few figures who have not spent much of their life working in or around the City.
“Where are the consumer experts, the practitioners, the independent voices?” Kevin O’DonnellYes, City knowledge is useful for FCA board members, but we should not lose sight of the fact that the regulator is in business to protect consumers, and the consumer voice is very important both inside and outside the organisation.
Several critics have suggested that the Treasury is trying to muffle the constant regulatory questioning of City practices and the banks in particular. I cannot say if this is the case, and it is not something the Treasury is likely to confirm, but if there is a grain of truth in it, Mr Osborne will need to tread carefully.
We need a strong and vibrant financial services sector, to be sure, and London remains a pre-eminent centre of which we should all be proud – but not at any cost. Regulation without teeth is no regulation at all.
It may also be time to consider whether the excessively close ties between the Treasury and the FCA should be loosened a little. It works for the Bank of England, there is no reason why it should not work for the FCA, which should be a completely independent regulator. A thought perhaps for the Treasury Select Committee?
Ultimately the chancellor is answerable to the great British public, who deserve robust regulation of the financial services sector which has, unfortunately, repeatedly let them down. I hope that for the sake of appeasing the City and big banks that threaten to move their domiciles elsewhere the chancellor does not lose sight of this.
Kevin O’Donnell is a financial writer and journalist
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