Written by Jad Soubra
On 20 May 2022, Charles Randell, Chair of the FCA and PSR, delivered a speech touching on how the FCA will play its part on the Government’s Levelling Up agenda and the future of the UK’s regulatory framework. We discuss some of Mr Randell's noteworthy comments below.
Building a regulator for the whole of the UK: Mr Randell commented that while it is natural that the FCA spends a lot of time talking to the financial businesses it supervises, listening to the users of financial services in the UK is an essential part of balanced and effective regulation. He stressed the need to ensure the FCA's culture is even more outward facing, that its meetings with people reflect the diversity of the UK and that it is diverse itself. It is the diversity of views it listens which forms the foundation of the FCA's legitimacy as an independent financial regulator.
Future Regulatory Framework: The Chair shared some thoughts on the recently announced Financial Services and Markets Bill and how this is set to significantly change the relationships between the Government, Parliament and the financial regulators. Concerns were expressed around the Government's proposals to equip itself with new powers to intervene in the FCA's processes, including a new power to direct the FCA to review areas of its rules. Mr Randell noted that the Government must guard against the risk of creating a channel for lobbying by vested interests wanting to bypass the regulator’s objectives of protecting consumers and promoting competition, using politicians to get the rules changed in their favour. Mr Randell called for a Future Regulatory Framework which preserves the balance delivered by the FCA's independence whilst reinforcing the ability of Parliament to play its role in holding regulators and the Government to account.
Regulating crypto: In order to bring speculative crypto within the FCA's regulatory perimeter, the FCA will need a workable operational plan that it is fully signed up to delivering. In order to achieve this, Mr Randell believes this will demand realistic expectations around how long is needed to prepare, how much improvement is required of crypto firms before they can be authorised and how consumers will actually behave online. He also noted the difficulties around supervising a decentralised global activity that is increasingly being used to commit financial crime and the question of how the FCA will cover the increased costs posed by this broader regulatory remit. This new branch of regulation will also necessitate a well-functioning partnership between Government, Parliament and regulators.
"I’m optimistic that the changes that we have put in train at the FCA will ensure we play our part as best we can. We are already taking a more assertive approach to rejecting unfit businesses seeking authorisation. We are already acting faster to eject businesses that are no longer fit. We are already taking and succeeding in difficult enforcement cases against businesses that fall short. And I’m confident that in the coming years we can be even faster, more assertive and more successful. But we can’t achieve our full potential on our own. We also need stronger partnerships with the Government, Parliament and other regulators and coherent and consistent policy action from everyone involved in regulation, to deliver measurable outcomes in the real world."