Andrew Bailey’s permanent replacement at the Financial Conduct Authority is being perceived as a “safe” appointment that is unlikely to shake up the regulator even though that is what many campaigners believe needs to happen.
The FCA revealed on Monday morning that the Treasury had appointed Nikhil Rathi to be its new chief executive. Rathi is currently chief executive of the London Stock Exchange and previously worked as a director in the financial services group at the Treasury.
The Treasury select committee already said in March that it would be holding a “rigorous” pre-appointment hearing with whoever was chosen to replace Bailey due to “culture, transparency and insufficient speed of action” at the FCA.
Campaigner Mark Taber said he was unsure the regulator was going to get the shake up it needs under Rathi. “It looks like a safe rather than a radical appointment,” Taber said.
Taber raised concerns about some of the “poorly thought out” policy that came out of the Treasury during Rathi’s time there, pointing to pension freedoms, the innovative finance Isa and outdated exemptions for online platforms, such as Google, in financial promotions regulations. These had been the driver of many issues that have blown up in recent years, said Taber.
SCM Direct co-founder Gina Miller (pictured) said failures during Bailey’s tenure had left trust in the FCA in tatters. “There are several quick wins but the most significant will be cultural change that sends a clear message to the industry that enforcement will now be the default option rather than the last option.”
Among the quick wins, Miller suggested the FCA could improve whistleblowing procedures and protections, introduce a lobbying register, mandate a format for 100% fee disclosure across pension and investment products, work with other regulators on common ESG standards, and to work with Treasury to ensure investigations into the LCF mini-bond scandal and Lloyds Banking Group are published without delay with recommendations enacted.
See also: FCA accused of ‘dirty tricks’ as LCF mini bonds investigation gets delayed
Taber said another concern is that the FCA is too slow to identify emerging risks in the fast-moving digital marketplace.
“The FCA’s ongoing failure to resolve the epidemic of scam investment ads with Google is an example where the FCA does not understand the issues nor how best to approach them with Google,” he said.
Brexit will be another pressing issue for the incoming chief executive.
FE Fundinfo regulations manager Mikkel Bates said Rathi needed to secure UK equivalence with the European Union as an immediate priority.
“UK-based funds will lose Ucits status and passporting rights, and more proportionality in things like Mifid II client reporting are needed. Additionally, foreign funds wishing to do business in the UK also need clarification on what they must adhere to, and when,” Bates said.
Pimfa chief executive Liz Field welcomed Rathi’s appointment.
Field described him as “an extremely knowledgeable and experienced leader” and highlighted his experience working on the UK’s interests in the European Union during his time at the Treasury. She added that he had a good knowledge of the wealth management and financial advice sectors.
