RegulationJul 1 2016

What to expect from new FCA chief

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What to expect from new FCA chief

Advisers should expect evolution rather than revolution following Andrew Bailey’s arrival at the Financial Conduct Authority; especially following Brexit.

Regulatory experts have said the former chief executive of the Prudential Regulation Authority, who joined the FCA today (1 July), is unlikely to shake things up immediately.

They also suggested he is likely to be distracted early on with the fall-out of last week’s vote to leave the European Union.

Michael Ruck, a senior associate at Pinsent Masons who used to work at the FCA, said Mr Bailey has some kind of awareness of how the FCA operates and will have been feeding into this since the announcement of his appointment.

Mr Ruck said: “If you look at one of the speeches he gave recently, he was talking about things like culture and remuneration, and using all the phrases which the FCA has been using for two or three years.

“One of the key things he will have to deal with is Brexit though - initially he is going to need to tackle confidence within financial services firms that the UK is a location to operate in to the extent they are doing so now.

“As part of that he will need to tackle the balance of the cost and intrusiveness of regulation,” added Mr Ruck.

This week Financial Adviser reported that Britain’s decision to exit the European Union is unlikely to change the need for financial advisers to meet Mifid II requirements and the demands of other rules generated by Brussels.

Mark Spiers, head of wealth management and banks at regulatory consultants Bovill, agreed the fall-out of the EU referendum could be a significant feature of Mr Bailey’s early days in his new office.

He said: “We are approaching a time when firms are going to be saying they are under pressure from an income perspective and a regulation perspective, so they will ask if there is anything the regulator can do to help.

“If you had asked me before the referendum, I would say the general trends in regulation would continue,” he stated.

“I think whatever happens we will have to be at least as closely regulated as Europe, because we will either still be in, or we are going to have to be so we can have some sort of third country status to access the European market.”

Alan Hughes, a partner at law firm Foot Anstey, said: “I think it is likely to be evolution rather than revolution.

“It will be driven by the market environment rather than by personalities. The incumbent, Tracey McDermott, was quite popular from the feedback I get and I don’t think people will be looking for a big change in approach.”

Mr Bailey’s appointment to the FCA was announced in January, with chancellor George Osborne claiming he was the “most respected, most experience and most qualified” person to do the job.

He succeeds Martin Wheatley, who famously said he would “shoot first” and ask questions later.

Mr Wheatley, left the FCA in September. He resigned after being told by HM Treasury they would not be renewing his term on the FCA board, which was due to expire in March.

At the time, the Treasury said “different leadership” would be required to build on the foundations Mr Wheatley laid.

Since then the FCA has been led by Tracey McDermott, who ruled herself out of the running for permanent heading up the City watchdog in January.