James Coney  

The FCA: A poisoned chalice

James Coney

James Coney

Andrew Bailey is a good man. Over the years I have met him a few times and he has always been open and personable. People I respect, who know him far better than I, like him and call him honourable.

The Lloyds Bank and London Capital & Finance victims who recently protested outside the Financial Conduct Authority headquarters say they were flabbergasted that he stood beside them and held a candle in respect of those that had died during the scandal. This humanity was not viewed as weakness, but as strength.

I think he may prove to be an excellent Bank of England governor – it did not surprise me at all when he pipped the rest of the field to the post.

I knew his predecessor, FCA chief executive Martin Wheatley, much better.

We got off on the wrong foot when we first met as I was sceptical as to what a man whose career was carved out in regulation in Asia could possibly know about protecting housewives in Scarborough.

But I ended up considering him a man of integrity who always tried to be honest and who refused to be cowed by the big businesses he regulated.

Now, I am either a terrible judge of character or these men are not the villains that they have routinely been painted.

So since both men have been branded failures for running the FCA is there not another possibility, that perhaps the role of running the watchdog is an impossible challenge – one that is always doomed?

For Mr Bailey, his undoing is considered to be the scandals involving LC&F and Neil Woodford.

LC&F is not just the failure of regulation for one company, but of the wider issue of how we regulate the internet and the sales of financial products there.

Trying to wrestle with Google, Instagram and Snapchat, where some toxic products are advertised, has been as much a challenge to the FCA as to all other areas of society in holding these tech giants accountable.

With Mr Woodford, it is important to remember that no laws, no actual rules, seem to have been broken – at least none the FCA did not know about and could not act on quickly.

What was Mr Bailey supposed to do? Force Mr Woodford to buy different stocks? That would have been a very dangerous signal to the rest of the fund management world.

No. Running the FCA is an impossible job, where you are caught between fierce consumer demands, an industry that spends millions trying to fight restrictions, and a Treasury that shackles your powers.

The new heads of the central bank and the FCA are two of the most fundamental changes in our financial landscape this year.

Maybe it is time we accept that no one will ever come away from running the regulator well. Good luck to the next person at the helm.