By Huw Jones
LONDON (Reuters) – Britain’s financial markets watchdog, which has been criticized for being too protective of some consumers, plans to rethink who should get protection while avoiding a return to the “light-touch” era littered with mis-selling scandals.
Announcing a mission review to be launched later this year, Andrew Bailey, who took over as Financial Conduct Authority (FCA) chief executive this month, said on Tuesday the challenge when setting the rules was to strike the right balance.
“How to balance the duty of care towards consumers, the duty of responsibility of consumers for their decisions, the role of firms and the role of the regulator, is an inherently difficult question to which there will be many potential answers,” Bailey told his first annual meeting on Tuesday.
“It lies at the heart of the FCA’s mission. So far, I would say it has not been adequately answered,” the former Bank of England deputy governor said. “It’s absolutely not about light-touch regulation. There is no agenda on that.”
The FCA has been criticized by some in the financial industry for being overly protective of investors who just make bad decisions, leading ultimately to the ousting of Bailey’s predecessor Martin Wheatley.
While Wheatley had a remit to draw a line under decades of mis-selling by British financial firms, with scandals ranging from mortgages to pensions to loan insurance, he was eventually pushed out by the government for being too hard on companies.
Wheatley famously once told banks he would “shoot first and ask questions later”, a statement Bailey has said he disagrees with.
George Osborne, who was Britain’s finance minister until losing his job when Theresa May became prime minister, ousted Wheatley and called for a “new settlement” with banks. This was widely interpreted as the government wanting a less stringent approach by regulators, now that lenders were more resilient.
Bailey said the review would not alter the FCA’s objectives of ensuring fair and orderly markets, and competition. The FCA’s remit has widened to include 56,000 firms after it took on consumer credit companies.
“It’s a very well timed initiative for the reason that the FCA really finds it difficult to prioritize resources given its very broad remit,” said Etay Katz, a financial services lawyer at Allen & Overy.
“The ever expanding paternalistic approach has reached a stage that threatened the direction of the organization,” Katz said.
(Editing by David Clarke)