The outgoing chairman of the Financial Conduct Authority has said the regulator is more trusted and respected now than it was when it was founded five years ago.
John Griffith Jones will stand down at the end of the month after leading the FCA through its creation in 2013. He had previously been deputy chairman of its predecessor, the Financial Services Authority.
In a speech to an event hosted by TheCityUK, Mr Griffith Jones said: "Certainly like any new organisation we had our teething problems. Indeed I grew familiar with the former chair of the Treasury Select Committee describing the organisation as being ‘in special measures’.
"Absent the benefits of papal infallibility, I learned that regulators frequently find themselves in the role of arbiters of issues without easy answers.
"Despite these challenges though I do think that the FCA [...] has established itself as a world-leading regulator. It is also an organisation with a very strong public ethos."
He said a recent survey for the FCA showed there had been a "steady upward trajectory in public confidence" in the regulator.
Mr Griffith Jones said the FCA had succeeded in two ways: by having a direct impact in protecting UK households and by transforming attitudes in financial services firms.
He said: "I am not naïve enough to imagine that misconduct has disappeared. Nor that Western European capitalism has undergone a spiritual epiphany. But I have witnessed financial services firms promote, and in some cases transform, their attention to customer outcomes from where it was in 2013.
"As you might imagine, I think it is essential for our vigilance to continue. But I am also conscious that the changes are not without their price."
Mr Griffith Jones acknowledged that firms faced having to pay for the FCA, the Financial Ombudsman Service and the Financial Services Compensation Scheme on top of the costs of their internal compliance departments and processes needed to comply with our rules, adding that these costs are ultimately borne by the consumer.
He said: "So how we demonstrate public value in this context is very important. Where it is possible to measure value for money quantitatively, we can and we should. Where not, we must advance the qualitative case."
Next month Mr Griffith Jones will be replaced by Charles Randell, a lawyer who is currently an external member of the Bank of England's prudential regulation committee.
Mr Griffith Jones, an accountant who previously worked with KPMG, said Brexit would be one of the main challenges facing his successor over the next five years.
He said: "Another perpetual fault line will remain the perimeter between policy, regulation and unregulated activity. Based on my personal interaction with many consumer and small and medium-sized enterprise campaigners for change over the past 5 years, I have developed the greatest respect for their energy, drive and commitment – without them the world would be a poorer place.
"But respect is not the same thing as agreement, and some of the issues on which campaigns run most strongly require a change in the social contract, and therefore logically the law, rather than in the FCA’s rule book or the opinion of its leadership.
"I believe that these should be for an elected government to direct and/or for Parliament to enact, in order to ensure the long-term independence of the regulator."
Jonathan McColgan, a financial adviser with Combined Financial Strategies, said he did not think there had been much change over the lifetime of the FCA.
He said: "If we are being honest the Retail Distribution Review was already in motion by financial advisers. The industry was already moving in that direction ahead of 2006 so in the last five years has the FCA achieved anything significant? I cannot say it has.
"It was not the FCA that was aware of what was happening with British Steel, it was financial advisers, and the issue of pension scams was brought up by Darren Cook. They have not addressed phoenixing and until they do we are going to see poor consumer outcomes."
damian.fantato@ft.com
