Andrew Bailey’s appointment as Bank of England (BoE) governor has been met with scorn from industry campaigners who believe his leadership credentials are tainted by a series of failures as boss of the financial regulator.
Chancellor of the Exchequer Sajid Javid confirmed on Friday the Financial Conduct Authority (FCA) chief executive will take the top job at the bank on 16 March, replacing Mark Carney. Javid described Bailey as a “stand-out candidate in a competitive field”.
But the announcement was not welcomed by industry campaigner and SCM Direct founder Gina Miller who, along with husband Alan, has publicly criticised Bailey for “systematic and widespread regulatory failure” in his role as FCA boss.
This year Bailey has had to deal with several high-profile scandals that have hit retail investors, including the collapse of mini-bond firm London Capital and Finance, the implosion of Woodford Investment Management and the gating of the M&G Property Portfolio over liquidity issues.
As well as an inability to properly supervise Neil Woodford and ensure open-ended property funds were fit for purpose, the Millers have accused Bailey of failing to enforce Mifid II and not addressing greenwashing in the industry.
‘Arrogant contempt for the interests of the British public’
In a statement to Portfolio Adviser, Miller said: “It is truly astonishing that an individual who has shown an arrogant contempt for the best interests of the British public, costing them billions of pounds of losses through his complete failure to supervise and enforce the UK financial services industry, should be rewarded with such an important position.
“What did the British public do to deserve this?”
Miller previously told Portfolio Adviser it was “shameful” the FCA excluded funds like Woodford from its fund liquidity rule changes which apply to non-Ucits retail schemes (Nurs) but not regular Ucits funds.
Bailey will have to take up the mantle on open-ended fund liquidity when he starts his role in March. The BoE’s financial stability report for December raised concerns that current redemption pricing and terms encourage first mover advantage in funds that hold illiquid assets, such as property or unquoted companies.
Does he listen to the right people?
Mark Taber, who has campaigned on behalf of London Capital and Finance mini-bond holders and holders of Aviva preference shares, said the BoE is a more natural habitat for Bailey than the FCA where “he has failed or been slow to grasp and identify obvious solutions to some key issues causing avoidable consumer harm”.
Taber said: “While you can’t be master of all trades in these roles a big part of the top management is having the ability and confidence to build the right team around you and listening to what they say.
“A big part of the BoE governor role is being able to listen to key stakeholders and act and communicate in public in such a way which inspires confidence. Mark Carney has been strong in this regard, but Andrew Bailey is unproven and the failings at the FCA under his watch raise questions over whether he really listens to the right people.”
Brexit will be top of Bailey’s in-tray
Janus Henderson multi-asset portfolio manager Oliver Blackbourn said Bailey is likely to face a challenging term in office as political uncertainty and a late-cycle global economy present twin threats to the policy objective.
He added: “Mark Carney extended his term in office to deal with the Brexit transition but the most acute phase has yet to occur. Therefore, the consequences of leaving the EU will be at the top of the new governor’s in-tray, especially as the consequences could be to send growth and inflation in opposing directions.”
The Investment Association welcomed Bailey’s appointment. Chief executive Chris Cummings said: “Andrew’s extensive experience and able leadership, demonstrated at the FCA, will enable him to successfully guide the bank during this critical period for the UK as we prepare to leave the EU.”
