The financial services industry should not regret the policies put in place after the crisis, the chief executive of the Financial Conduct Authority has said.
Speaking at Mansion House in London yesterday, Andrew Bailey said the UK was still feeling the effects of the financial crisis, which started in 2007.
He said the industry should focus on tackling those effects rather than lamenting the actions taken at the height of the crisis.
Mr Bailey said: “It is important to have in mind the things that have not happened in that period: we have avoided a serious unemployment crisis; widespread repossession of homes; and likewise widespread business failures on the scale seen in some past recessions.
“It is an old saying in our world that the best achievements are the things that do not happen for which our policies can take some credit.
“It is the outcomes of policies that matter ultimately. We should not now start to regret the policies that are in place, but remember the scale of the crisis and what has been avoided.
“But, now is the time to look forward and take a very close look at how we manage the challenges ahead, which is a separate issue. At the FCA, we are ready to play our part.”
Mr Bailey said there were “profound changes” going on which shaped the context of the FCA’s work.
He cited research by the Institute for Fiscal Studies which showed that by their early 30s, those born in the early 1980s had average net household wealth of £27,000 per adult - about half the average wealth holding of the 1970s cohort at the same age.
Meanwhile real median income for those aged 25 to 55 grew by just 2 per cent in total between 2004-05 and 2014-15, compared with 26 per cent between 1994-95 and 2004-05.
And at the same time at the age of 30, 40 per cent of those born in the early 1980s were owner-occupiers, compared with 55 per cent of the 1940s and 1970s cohorts, and more than 60 per cent of the 1950s and 1960s cohorts.
The 1930s cohort was the last to have a similar homeownership rate.
Mr Bailey said: “Combine these developments with the trend to switch the responsibility for, and the risk of, lifetime retirement savings from the state and employers to individuals and it is easy to see the challenges for public policy.
“This includes challenges for us at the FCA since these changes in lifecycle positions have profound effects on long-term savings, pension provision and associated financial products.
“Next year we reach the tenth anniversary of the start of the financial crisis. That’s a pretty sobering thought.
“More sobering still is that we are still very much living with the consequences, and the evidence I set out on generational shifts starkly illustrates that.
“The policies that have been enacted over the last ten years were, and remain, a necessary response to a severe crisis.
“Back in 2007 I well remember that it was initially a mood like the beginning of the First World War of “the war will be over by Christmas”. But that was not the case, anything but.”
Shortly after taking up his position at the FCA, Mr Bailey said retirement savings was his biggest priority.
