New FCA CEO signals change of direction for UK regulator

This week, the UK government announced the appointment of Andrew Bailey to the top job at the FCA, ending months of speculation about the future direction of the regulatory body. Mr Bailey, who will take on the role from July, succeeds Martin Wheatley, who was ousted from the post in September amid criticism over his tough approach. Following his departure, the FCA dropped its investigation into banking culture, pay and practices. The arrival of Mr Bailey, who is currently chief executive officer of the Prudential Regulation Authority (PRA), the UK's other financial services regulator, is expected to result in lighter touch regulation.hideIn a statement, the UK's Chancellor of the Exchequer, George Osborne, said: "The government is determined that the financial sector operates to the highest standards. Anyone who has dealt with Andrew knows he will be tough but fair, and understands the flaws and merits of the sector better than anyone." According to Mathew Rutter, partner at law firm DAC Beachcroft, the UK regulators have been in a state of "flux". "The PRA and Bank of England is having to understand differences between insurance and banking, while the FCA recently experienced the departure of its chief executive, Martin Wheatley," he said just prior to the announcement that Mr Bailey would be joining the FCA. Under new leadership the FCA is expected to become "less protectionist", according to Mr Rutter. He noted that the regulator dropped a number of thematic reviews shortly before Christmas. Mr Bailey takes over at the FCA during challenging times. The UK faces a vote on whether to stay in the European Union that could have major ramifications for financial services regulation in the country. He also will be required to build bridges after banking and insurance scandals have damaged relations between regulated entities and the FCA. "Recent developments have shown that the most pressing issue in the system right now is the need for stable leadership at the FCA," Mr Bailey said in a statement. The regulator also faces a changing role with new competition powers, according to Mr Rutter. The UK regulator is likely to look more holistically at how well markets are working, rather than purely focusing on potential harm to buyers, he explained. The regulator is also set to extend its new senior managers regime-which makes individuals more directly accountable for failings-to insurance brokers, he added. Mr Bailey's appointment came as a surprise. It followed news in January that acting CEO Tracey McDermott had ruled herself out of the running. He is a career central banker, although he had oversight of insurers' prudential regulation while at the PRA/FCA predecessor the Financial Services Authority. As CEO of the PRA, Mr Bailey criticised Solvency II, Europe's recently implemented capital and risk management rules. In 2013 he reportedly said that Solvency II would do little to make the industry safer and was "vastly expensive". The Association of British Insurers (ABI) welcomed MR Bailey's appointment. "Andrew will bring vast experience, intellectual rigour, sound judgement and the confidence of the Treasury to this vitally important role and build on the impressive job Tracey McDermott has done as interim CEO," it said.

New FCA CEO signals change of direction for UK regulator

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