The outgoing boss of the Financial Conduct Authority has sounded a warning shot to the media and markets, defending the regulator’s independence and right to make “difficult and important decisions” in the interests of end consumers.
Speaking at a Bloomberg event yesterday (4 February), the FCA’s acting chief executive Tracey McDermott said this is a year that will demand “great tenacity” in its push for real and enduring reform across the City.
She pointed to the implementation of the Senior Managers Regime in a few weeks time, along with reviewing responses to the Financial Advice Market Review, which is looking at ways to bring advice back to the mass market.
“And on many of the most significant social and economic issues of our time – pensions, savings and mortgages included – we can expect to see further strides forward over the next 12 months.”
Ms McDermott admitted that this push, “as has been amply demonstrated over the last few week”, will continue to be conducted under intense scrutiny.
However, she added that this is “quite right and proper” and that she would be far more worried if there were no political or public interest in financial conduct.
“It is our job to make markets work well – delivering for individuals, for businesses – large and small, and for the economy as a whole.
“That is a challenging task. My team at the FCA make difficult and important decisions every day and we are acutely aware that all of these decisions have real life costs and impacts not only on those we regulate but, more importantly, on the consumers and end users of their service.”
While Ms McDermott said she could not pretend to be comfortable with this situation, “we do welcome scrutiny of our decisions and actions”.
“That scrutiny is an important part of ensuring that we, as a relatively new regulator, continue to learn, and remain focussed on how we can build on what we do well and what we can improve on for the future.
“It is important, however, that we listen and take into account external comment but we do not allow that to become the key driver in our decision making.”
So far this year, the FCA has come under fire for the cancellation of a review into banking culture, while Ms McDermott raised advice industry concerns by stating that a return of commission was on the FAMR table.
At the end of last month, the regulator finally confirmed its new chief executive would be the Prudential Regulation Authority’s current boss Andrew Bailey, while at the start of this month, the FCA survived a heated parliamentary debate on its very future.
Speaking yesterday, Ms McDermott referred to an earlier speech on the need for sustainable regulation, leaving behind the “regulate, deregulate, repeat cycle” that has served the financial markets so poorly in the past.
“There are many facets to delivering that but at the heart is the need for an independent, confident regulator who makes decisions based not on what will please a particular group or be politically expedient in the short-term, but on the basis of a fair and objective assessment of the facts and what will deliver the right long term solutions.
“Given that in many issues we consider there will be diametrically opposed views as to what the right answer is, the one thing we can be sure of is that we will not please all of the people all of the time.
“We are not here to be popular,” stated Ms McDermott. “We are here to make independent, informed decisions on how to deliver against the important task parliament has set us.”
peter.walker@ft.com
