Andrew Bailey, Chief Executive of the FCA, gave a speech about the the future of financial conduct regulation, at Bloomberg, London. He started by saying: “You may quite reasonably think that a title of ‘The future of financial conduct regulation’ is overly dramatic in an environment where we have quite enough drama in the world of public policy thank you very much. Or, you may think that it is typical of a regulator to over promise and under deliver. We shall see, but it is a reasonable ask that I should start by explaining why this subject and why now?”
Let me go back to 2017 when we published the FCA Mission statement, which continues to be the centrepiece, the glue, that holds together our approach to the large landscape of activity that the FCA covers to meet its statutory objectives. It shapes our culture too, for example we have re-done our statement of values in the light of The Mission. What we did with The Mission was to set out a much-needed framework to explain and interpret why we regulate conduct across the markets for finance. At the heart of it was a very simple point – but simple is I believe a source of strength – that we always and only regulate in the public interest, and we must always and only do just that.
We have therefore set out to explain how we interpret the public interest in the light of the objectives given to us in statute by Parliament. And, we also recognise that while those objectives are timeless, or should be, how we put them into practice will change with time as the world around us changes. The public interest is therefore our anchor, and it needs to be a strong one.
Objectives should be timeless
I was careful a moment ago to say that our objectives should be timeless, which implies an element of doubt. That’s right, because the record of history indicates that broad attitudes towards public interest regulation have changed in what can appear to be long waves. Those changes can be large and destabilising for both the regulator and the regulated. Prior to the financial crisis, the light touch era reflected a view that a greater emphasis on the private interests of firms, their owners and managers would benefit all and thus the public interest. I tend to call this the ‘rising tide lifts all boats’ view of our world. But it didn’t turn out that way – there were very clear losers, and the scale of that problem has emerged over a long period of time.
Decade of re-regulation
The consequence has been a decade of re-regulation, reversing the long swing. And, this has not been the invention of self-interested regulators alone, far from it. There are very strong public forces pushing for stronger protection in society. If you spend a day or two with my inbox, you will see that writ large.
This can easily result in regulators being cast as the villains of one side of the argument or the other. Indeed, I am always conscious of the need to avoid to resort to the comfort that, if my inbox suggests that I am the villain of both sides, I must be broadly okay. Let me therefore have a go at setting out how I view our stance in this debate on the role of regulation in a big picture sense.
Read the full version of the speech at the FAC website.