What unites firebrand socialist MPs and stalwarts of the Tory establishment? The answer – somewhat unbelievably – is the state of our main financial regulator.
The Financial Conduct Authority is heading into a cold winter with storms swirling on all sides. It faces fury from parts of both the Square Mile and Westminster for hamstringing growth, and anger from consumers and whistleblowers for sleeping through scandals like the collapse of Neil Woodford’s investment fund and the ponzi scheme run by London Capital & Finance.
The lineup of critics would make for quite a sight; picture the man who would have been Jeremy Corbyn’s chancellor deep in agreement with Rishi Sunak’s City minister.
The City regulator has an unenviable patch, for sure, stretching as it does from efforts to boost the status of London’s public markets to ensuring pre-paid funeral planners don’t rip off the bereaved.
A look at its public announcements in the past two days point to the scale of the task: a £40m fine for Barclays stemming from events in 2008; sweeping plans to regulate crypto; a £13m fine for Macquarie Bank due to the actions of a young rogue trader; oh, and the rebuttal of a scathing report from a group of MPs accusing it of “incompetence”.
Speaking to City firms at a Mansion House dinner in October, FCA boss Nikhil Rathi invoked Hollywood as he acknowledged the difficulties of his regulator’s balancing act.
“Unlike Tom Cruise, I don’t see the FCA’s objectives as mission impossible. Not if you are alongside us,” Rathi said.
“We ask for all your help, such that by next year when Mission Impossible 8 comes out, we can demonstrate that the FCA’s mission impossible is in fact possible.”
The risk facing the FCA chief, beyond having to rely on laboured movie references, is that very few people are alongside him. He is in danger of alienating business with the perception the FCA is coddling consumers rather than promoting competitiveness, while consumers could argue they’ve been burnt by slack oversight. Meanwhile, whistleblowers say they have been hung out to dry and the government is pushing the seemingly contradictory idea of “regulating for growth.”
In another speech last night, the watchdog’s chief operating officer set out plans to focus on growth and innovation, financial crime, consumer reliance, and efficiency as a regulator. But with critics already warning this strategy constitutes “more of the same” it’s clear the regulator has its work cut out if it’s restore trust.