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“Soon after the financial crisis I was in Beijing and managed to meet with the CSRC, the Chinese securities regulator. It was an enlightening meeting. The individuals that I met with explained that up until the financial crisis the UK regulators had been the teachers (to be fair they were pretty complimentary about the SEC too) but they explained that recently the teacher had failed and the student would do better…
It is a sentiment that might well be shared by other regulators today. The FCA’s credibility is at an all time low as a result of poor response to recent scandals, glacial response times and low staff morale.
Assuming that the proposed Financial Services and Markets Bill does eventually make it on to the statute book, the UK regulators will likely have far greater powers than they have now. With power comes responsibility. If the FCA is to deliver on that responsibility it needs to raise its game considerably. If the UK regulators are to re-establish the global respect that they once held, they will need to harness the wider experience of successful global regulators and listen to what they are hearing closer to home. Improving the quality of their resources would be a good start. By way of contrast the MAS in Singapore appears to have little trouble in employing and retaining top talent, something that UK regulators have struggled with for years. At our recent roundtable with Lord Blackwell, one CEO suggested using secondments of senior practioners to the FCA. It would certainly help the regulator listen to the industry, and also benefit from real-world experience.
With Brexit in the rear view mirror the future competitiveness of the City is going to become even more important. Putting aside arguments about whether the UK regulators should have formal objectives around competition, an efficient, effective and respected regulatory regime will do much to boost competitiveness.
Giving credit where credit is due, prior to Brexit the UK regulators performed well around the European rule making table. Indeed, in many areas they were the driving force in establishing regulatory standards that were largely palatable for the UK. Given that London remains by far the largest financial services centre in Europe and the UK will now be making its own rules going forward, regulatory divergence is a given. Whether the UK will diverge from the EU or the EU diverge from the UK is a moot point; fog in the Channel, continent cut off, springs to mind.
Over the last couple of years the City has demonstrated its robustness not (as it should be) because of the quality of the regulatory regime, but in spite of it.
The incoming chair of the FCA, Ashley Alder, joins from the Hong Kong’s SFC and will be uniquely placed to bring the best of what the SFC has got right. He will have his work cut out to restore the reputation of the FCA to what it once was, but the prize, not least in terms of the global competitiveness of the UK, would be worth it.”
‘View from the Chair’ is Bovill’s regular column from our Executive Chair Ben Blackett-Ord who founded the firm in 1999 and led it as CEO until 2022. Ben continues to support Bovill’s executive team and clients, as well as being a prominent figure in the industry.