About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

FCA Chief: Shaking Up the Regulatory Rule Book Post-Brexit

Subscribe to our newsletter

Andrew Bailey, the CEO of the UK’s Financial Conduct Authority (FCA), this week laid out his thoughts on the future of financial conduct regulation – outlining a series of bold statements regarding the importance of risk-taking and competition, the benefits of a minimum regulation environment, and the challenges of equivalence with the EU that could see the UK move in a very different direction post-Brexit.

Almost uniquely among financial regulators, the FCA has a specific objective to promote competition in the interests of consumers, and Bailey emphasised the centrality of this to the FCA approach – a point that should reassure institutions apprehensive about the ever-increasing regulatory burden. “Advancing the public interest does not mean that we have no interest in corporate health and profitability. Healthy competition depends on firms earning returns on the investment made. And, in fact, our governing legislation already tells us that we should take into account the desirability of sustainable economic growth in the UK.”

The UK will continue to be an active member of ESMA and work closely with its EU27 counterparts on legislation that is already in development while the UK negotiates its departure – and Bailey stressed that the relationship would remain close. However, he also highlighted the differences between the UK and EU approach to regulation – suggesting that the UK could make a radical break from previous tradition and move towards a potentially less invasive approach to oversight.

Over the years, the EU has moved from a system which sets minimum standards of regulation (the world of minimum harmonised directives) to one filled with standards that are both minimum and maximum (the world of maximum harmonised regulation and directives) – a change which Bailey acknowledged could be “intrusive at the national level,” although it has undeniably played a valuable role in ensuring a level playing field and facilitating supervisory cooperation across the EU market.

However: “Left to our own devices, I think the UK regulatory system would evolve somewhat differently,” he confirmed. This would be likely to incorporate a more principles-based approach, taking on board practical experience and focusing less on detailed rules and regulations, which can drive fragmentation in markets.

“I see rules as a means to deliver outcomes, and it is important not to focus too much on rules as the beginning and end of the process of regulation,” he said. “Outcomes matter at the end of the day… rules are a means to deliver them, but not the only one.”

Based on Bailey’s comments, it looks as if the UK post-Brexit could move in a rather different direction – towards a financial system that focuses on sustainable and transparent returns based on fair and regulated risk, without undue oversight or excessive box-ticking. “There should be a debate about the future of regulation,” concluded Bailey. This debate, assuming it includes the opinions of affected institutions and stakeholders, has the potential to provide much-needed relief for institutions already struggling under an immense regulatory burden.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: The Global LEI System – Putting the Pieces in Place

This webinar has passed, but you can view the recording here. The Regulatory Oversight Committee has sustained development of the global legal entity identifier system – or GLEIS – over the summer months, most recently endorsing pre-Local Operating Units in China, Argentina, Poland and Italy to make a total of 13 units worldwide that are...

BLOG

Regulations in the Balance as Institutions Remain Sustainability-Focussed: ESG Summit London Review

Despite a perception that ESG is in retreat around the world, financial institutions continue to take the issue very seriously as a matter of risk management, a trend that continues to exert an influence on the data demands of organisations. It isn’t even the compliance imperatives of organisations operating in heavily regulated parts of the...

EVENT

TradingTech Briefing New York

Our TradingTech Briefing in New York is aimed at senior-level decision makers in trading technology, electronic execution, trading architecture and offers a day packed with insight from practitioners and from innovative suppliers happy to share their experiences in dealing with the enterprise challenges facing our marketplace.

GUIDE

Enterprise Data Management, 2010 Edition

The global regulatory community has become increasingly aware of the data management challenge within financial institutions, as it struggles with its own challenge of better tracking systemic risk across financial markets. The US regulator in particular is seemingly keen to kick off a standardisation process and also wants the regulatory community to begin collecting additional...