The Chartered Institute for Securities & Investment’s chief executive Simon Culhane has said the Financial Conduct Authority is always “playing catch-up”, arguing the “lack of consistency” at the regulator is to blame.
Speaking to FTAdviser earlier this month (February 3), Culhane, who recently announced he would be stepping down from the role, said it is a truism that the FCA, like many other regulators, is always following innovation rather than taking a proactive approach.
“The only way you can really [change] that is to make sure you involve and work with the practitioners,” he said.
“The point is you've got to work in collaboration and involve the practitioners rather than just dictate. It has to be a common regulation otherwise you are forever destined to catch-up and it becomes antagonistic and it doesn't really work.”
Culhane described the work of a regulator to the policing system in the UK, arguing that it is very difficult for a regulator.
“Essentially, in order to make it work, it has to be collaborative and that means you have to listen and work with all the stakeholders, not one particular one but all stakeholders, and be realistic and proportionate,” he said.
“Members tell us their biggest problem is the lack of consistency amongst the FCA people, they don't stay long enough and they don't understand the subject,” he said.
“If you talk to any group of CEOs in a room, they'll tell you that's the fundamental problem.”
He argued that it has been a problem for many years at the FCA, stating the turnover of staff at the regulator has played a role.
To eradicate some of these issues around consistency, Culhane said the FCA needs more involvement with practitioners, particularly the stakeholders, shorter consultation papers and a reduction in time to get things through.
“You need people to stay for a reasonable time but equally you need new blood in there so it's a very delicate balance for the regulator,” he said.
To be regulated or not to be?
Discussing some of the regulatory requirements for firms, be it advisers or asset managers, Culhane argued that the rules should be the same for those working at the FCA.
He explained it is not fair to let a regulator regulate who is not professionally qualified themselves.
Culhane said: "We've got regulators who are deciding what firms and others should do and one of the things they make the firms do is be qualified and yet they aren't qualified in the first place.
“You can see why that drives members. They don't believe that many of the people talking to them from the regulator, actually understand what is going on, and if they've got no qualifications behind them - you can see why that argument might hold water.”
Culhane said the FCA should require its staff to have the necessary qualifications in order to regulate the firms and individuals it is working with.