The Financial Conduct Authority’s chief executive Nikhil Rathi has outlined the regulator’s plans to "build a regulatory environment for the future", stating that some of its standards could be tougher than those in the EU.
Speaking at City & Financial Global’s City Week 2021: Financing A Sustainable Global Recovery conference today (June 22), Rathi said five years from now, innovation will continue to drive new ways of doing business, sustainable finance will be mainstream globally and leaving the EU will have transformed the way “we develop regulation in the UK”.
He said: “To respond effectively, the FCA is constantly learning and adapting. We have to be agile and confident to build and operate an effective regulatory regime for the firms and consumers of the future.”
Rathi outlined three ways in which the regulator will be doing this which includes meeting the needs of UK markets, setting the bar high at the gateway for entry to regulation and intervening assertively to deal with misconduct, and lastly, playing its part in international regulatory discussions.
Referring to meeting the needs of UK markets, Rathi said leaving the EU had provided freedom to tailor rules to better suit UK markets.
He said: “We’re making them more efficient and targeted, and removing unnecessary barriers to entry. We are not diverging just for the sake of it, we are ensuring appropriate safeguards and upholding – in fact, building on - high, internationally consistent and outcome-driven standards and this may well involve in some areas standards that are tougher than those in the EU."
Rathi explained the regulator had a focus on the broader Mifid regime and has contributed to a Treasury consultation coming out this summer.
“The proposals are the product of our experience of the EU regime, listening to the views of market participants, and reflecting the future of UK markets,” he said.
Outlining the areas most in need of reform, he said these were market structure, the operation of the transparency regime, the regulation of commodity derivatives markets and improving access to market data.
Turning to primary markets, the FCA boss said effective public markets were critical in enabling companies to finance their businesses, which in turn created growth and jobs.
“Trusted public markets provide opportunities for investors in a well understood environment with high standards of disclosure and FCA oversight,” he said.
“But according to the UK Listings Review, chaired by Lord Jonathan Hill, the number of listed companies in the UK has fallen by 40 per cent since 2008.”
In response to this, the regulator is in the process of consulting on a set of new rules for Special Purpose Acquisition Companies (SPAC) but more changes are in the works, he said.
“Today I can announce that we will next month be bringing forward a consultation seeking views on removing other barriers to companies listing.
“This will increase opportunities for investors without compromising on safeguards.”
Earlier this week, the economic secretary to the Treasury was also speaking at the City Week event and said the UK would be missing a trick if it did not support the fintech industry and firms in this space.
MP John Glen discussed the government’s vision for the future and said the Treasury had plans to support a more technologically advanced financial services industry.
Tackling financial crime
Meanwhile, last week the FCA warned yet again that consumers should “be prepared to lose all their money” when investing in cryptoassets that are “largely unregulated”.
Consumer research published by the regulator estimated that 2.3m adults now hold cryptoassets, an increase from 1.9m last year.
Rathi said an example of how it is tackling financial crime at the gateway was through its registration of cryptoasset firms.
A significant number are not meeting the required standards under money laundering regulations and he said the regulator has identified 111 firms operating without registration.
Rathi said the firms are listed on its website and the regulator plans to take further action where appropriate.
He said: “We want to support innovation and believe we can do so whilst maintaining rigorous standards on anti-money laundering controls. Our robust approach continues in our supervision of firms.
“If, once we do authorise a firm, we see they are not using their authorisation or indeed misusing it, we are not afraid to act quickly to remove their permissions. They will have to ‘use it or lose it’.”
He concluded: “To finish, five years is all it takes for the shape of financial services to change. Today I have shared how we are embracing change by building a regulatory environment for the future.
“We are also transforming the FCA to become a data and technology led regulator to meet these challenges. While these steps we are taking to deal with the changes we are expecting, I am confident they will stand us in good stead when less predictable changes come our way, which they surely are."
sonia.rach@ft.com
What do you think about the issues raised by this story? Email us on FTAletters@ft.com to let us know
