Financial Conduct Authority chief executive designate Martin Wheatley has set out how the industry will be subject to a tougher regulator focused less on “soapbox rhetoric” and more on competition and good consumer outcomes.
Speaking at the launch of the FSA’s “Journey to the FCA” document published this morning, Wheatley said the new regulator will be more forward-looking, with “less regulation through the rear view mirror.”
He said staff at the FCA will be bolder, and that they will concentrate their efforts on thematic reviews rather than focusing on individual firms.
Wheatley said: “One of the questions I am asked is it is all very well talking about this culture change but you employ the same people today as the FSA did yesterday, so what is really different? Partly what is different is the legal powers the FCA will have, and partly it is the messaging from FCA chairman John Griffith-Jones and I about how we expect people to operate. We do expect people to ask tougher questions and be more intrusive. I want people talking to the chief executives and not the heads of compliance. I want to know where a business is going, not how it has complied with a set of rules.”
Wheatley said the FCA will continue to focus on its enforcement work.
He said: “Do not expect to see a change in our appetite to tackle serious cases of wrongdoing in the market. Credible deterrence remains central to our strategy.”
He set out the three outcomes of the FCA, based on putting consumers at the heart of business. These are that:
consumers get financial services and products that meet their needs from firms they can trust
firms compete effectively with the interests of their customers and the integity of the market
markets and and financial systems are sound, stable and resilient with transparent pricing information
Wheatley said the FCA’s competition work will see the regulator work closely with regulated firms.
He said: “We are not here to stand in the way of progress and innovation, we are here to ensure that progress and innovation yields good outcomes for consumers.”
Wheatley said he has noted a marked change in the “tone at the top” following last month’s report into how sales incentives drive misselling. He said chief executives have signalled they are changing how their reward schemes are structured as a result. But Wheatley said: “It it is still just words until we see the actual product of that delivered through the frontline into the products that are sold.”
Asked whether he was moving away from the “be very afraid era” set out by former FSA chief executive Hector Sants Wheatley said: “We do not want to be accused of soapbox rhetoric about whether we want the industry to be afraid or not afraid. Frankly our approach is focused on good outcomes.”
He added: “Our goals as the FCA are very clear. We will work for an industry that is better at serving the needs of consumers. It is a huge opportunity for the industry to press the reset button.”
Aifa policy director Chris Hannant says: “Regulatory authorities have previously had far too little public accountability for their actions.
“We would like to see clear and transparent outcomes set for the FCA it can be judged on. At present the proposed criteria are far too subjective. The role of the regulator should be to foster a successful financial services sector and encourage consumers to take positive decisions about their finances. We need clear and measurable objectives, such as the levels of savings and protection consumers have.
“The regulator has made clear it will take a more interventionist approach. A key measure of the success of this approach will be a reduction in compensation claims and overall levels of compensation. The regulator should be accountable for delivering on this objective.”