Speaking at the FCA’s annual public meeting, Andrew Bailey (pictured) noted that while the regulator did not take a position on Brexit itself, there were aspects of its regulatory approach that “may have developed differently had they done so unilaterally” rather than as part of the UK’s position within the EU.
As a result, he said the FCA was using the “opportunity” presented by Brexit to consider how best to regulate conduct in future.
Bailey also argued that he wanted to see firms adjust their behaviour so that they do not simply treat rules as a box-ticking outcome, but place an emphasis on the outcomes for their customers.
“Any organisation that prioritises being within the rules over doing the right thing, will not stand up to scrutiny for long,” he said.
Clear lines of accountability
Bailey suggested the senior managers and certification regime (SM&CR) was leading to real change, shining a light on the “clear lines of accountability” between a decision made and the senior manager who made it.
And he emphasised that beyond the SM&CR culture will continue to be an issue of the highest importance to the regulator.
“It is a central consideration for our supervisors, who look at drivers of behaviour, staff incentives and governance arrangements in their day-to-day interactions with firms,” he said.
Bailey also accepted that there were “data quality issues” with the 750,000 records contained within its Register, adding that it “needs to be made fit for the now larger remit of the FCA”.
As a result, it will be investing £5m into the Register over the next year.
Operating at the edge
Bailey issued warnings over the use of technology too, noting that while innovation offered opportunities to better help consumers, it could also be “an enabler of new forms of harm”.
He pointed out that the regulator is seeing examples of this today at the “blurry edges of the regulatory boundary”.
Bailey continued: “The question of what sits inside and outside this boundary – also known as the regulatory perimeter – is a matter of great importance for consumers and firms alike.
“There is a growing impetus to grapple with this question now, as technology increases the speed of change in financial markets, and we continue to see examples of firms operating at the edges of the perimeter causing harm to consumers.”