Yes, it’s 100 days since the Financial Conduct Authority (FCA) took over from the late unlamented Financial Services Authority (FSA), and that makes it an appropriate time, if not exactly to light the candles on the cake, but at least to review the new regulator’s progress.
Which is why chief executive Martin Wheatley will be standing up today at the Association of British Insurers’ Biennial Conference to give his first end-of-term report to the assembled masses. And, in his (pre-released speech), he’s going to say that things have changed under his stewardship. Well, he would, wouldn’t he?
“One of the questions I was most frequently asked 101 days ago was: “Is the FCA going to be genuinely different from the FSA?”. We understand why people reserved judgment – the FSA needed to change,” he’ll say.
“100 days later, I think we are taking steps in the right direction. The FCA is in many areas a very different animal from the FSA.”
Under New Management
‘We’re not just asking: “Is this product compliant? Does it tick every legal box?” But actually: “is the outcome good? Is the market competitive?” And is fair treatment of consumers designed into products and culture?’
So far, so good. Much of this is pretty much a re-run of what Mr Wheatley said at the FCA’s inauguration on 1st April. The old FSA, he said, had started out as a light-touch regime that had struggled with the impact of the banking crisis, and it had responded with a 180 degree turn that had stressed compliance, compliance and more compliance as a way of protecting consumers.
All right, I’m paraphrasing there, but that was the general gist of it. Instead of bombarding the poor consumers with details that they didn’t need and couldn’t process, he said, the FCA would make it its business to give them an easier time by working with the spirit of the rules rather than tinkering with the fine print.
And today’s announcement will say much the same thing. “‘This is not a case of one side having to win and the other having to lose,” Mr Wheatley will say. “We each have a vested interest in making markets work well for all participants.”
“Regulators need to serve the market better by acting more swiftly,” he’ll add. “By intervening earlier and more intelligently to avoid crises down the line.” Ouch, that word intelligently has a bit of a brash-newcomer hint to it, doesn’t it?
Focus On Insurers
But fortunately, there’s more heft in Mr Wheatley’s thoughts. He wants to see the FCA doing more to enforce proper competition between rival providers. Or rather, he wants the emphasis to be on consumer action. “We want consumers to be in in a position to drive healthy competitive markets so that they become the new normal” is a little different from “we’re going to crack the whip on anti-competitive practices.” Isn’t it?
Well, yes it is. But already the guvnor is off in another direction completely. His first big assignment, he says, is to examine the function of extended warranty insurance and so forth. The kind of policies that are sold to people when they buy a washing machine or a television. Or, as he put it, “profit-making machines” for retailers
Interesting, then, and no coincidence, that the guvnor will be making his address to a conference of the nation’s insurers. He’s already told us – last week, in fact – that the FCA intends to put the business of automatic policy renewals under the lens. And he’s been making it clear that the insurance companies are generally next in line for some cross-examination, now that the banking sector has been whipped into line. “It’s fair to say we are turning our attention to them more,” he’ll say.
Tough talking indeed. More of this, please, Mr Wheatley.