On 16 October, the FCA published a speech by its Chief Executive, Nikhil Rathi, delivered at the City Dinner at Mansion House, entitled ‘Collaborate to compete: why we must all embrace a growth mindset’.
In his speech, Mr Rathi flagged that in order to achieve the FCA’s new secondary objective of supporting international competitiveness and growth over the medium to long term, five ingredients are essential: 1) an effective regulator; 2) an international standard-bearer; 3) far-reaching reforms to support a bolder risk appetite; 4) a raised ambition on data and digital infrastructure; and 5) the best talent.
Addressing each of those points, Mr Rathi noted the following:
- An effective regulator: Firms want speed, clarity, and certainty particularly on authorisations.The FCA has invested in its case teams over the last three years, is automating processes, has increased scrutiny, is intervening earlier and faster, and is being proportionate, focusing on the most serious harms. It is starting to see improvements – better value products, communications and customer journeys, better deposit competition and faster pass through of rate rises.
- International collaboration: The FCA plays its full part in setting global standards – crypto, sustainability, and non-bank finance – and Mr Rathi co-chairs IOSCO’s Financial Stability Engagement Group, which has risks on its agenda including private markets, leverage, the funds complex and risks to traded markets. Artificial intelligence is also a focus.
- Supporting a bolder risk appetite to underpin long-term investment: Mr Rathi discussed the FCA’s process of engagement and consultation on ‘deep changes’ to the listing regime to address friction, and confirmed that a consultation on detailed rules and Cost Benefit Analysis is ‘coming shortly’. The FCA’s Board will consider the outcome carefully before making final rules in the first half of 2024. He also referred to the FCA’s priorities for asset management and confirmed that it will support the Edinburgh and wider pension reforms so that UK investors get better long-term returns and more capital is available for infrastructure.
- Investing in digital and data infrastructure: More efficient and secure digital identity can reap huge benefits for access to financial services and tackling crime. The FCA has 22 firms in its innovation schemes testing digital identity solutions, and is undertaking various other initiatives to improve digital and data infrastructure. This includes plans to make more of its rulebook machine readable.
- Skills and talent: With their recent consultation on diversity and inclusion, the FCA and PRA want to support the leadership many firms are showing. Mr Rathi notes that cracking the issues that exist in financial services can support risk management, make sure there is no place for egregious non-financial misconduct, attract talent and so support the sector’s competitiveness.