The future of regulation
I want to close with my third topic, the future of regulation.
In October, last year I gave a speech on regulation in a changing world.
In it I argued we needed to think about more outcomes-based regulation – looking at what the regulatory system was trying to achieve and whether those outcomes were being met.
That as regulators, we need to use the full range in our kit, not just have disclosure as a go-to tool. If anything, the last six months have shown we can think creatively about what we do and how we do it.
That we need to work closely with other agencies and regulators as product boundaries become blurred. That the FCA’s own requirements should be more straightforward, especially for smaller firms. And we need to make sure the rulebook isn’t analogue in a digital age.
I believe those arguments still hold and Covid-19 has shown they are even more urgent.
We need to look at whether our handbook of rules is doing what it needs to do, and amend if necessary.
I discussed too the potential impact on regulation of the UK’s departure from the EU.
The UK left on 31 January 2020. The transition will end at 11 pm on 31 December.
We have worked closely with the Government and Bank of England to minimise the potential for disruption, and firms, particularly the large ones, have made their own preparations.
And negotiations on the UK’s future trading relationship with the EU continue, including decisions on equivalence. Our message to firms is, therefore, to continue to prepare – indeed to ramp up preparations – for a range of scenarios.
The question for after December is how will the regulatory system look once transition ends, whatever the outcome.
The FCA has long been a multilateral player, demonstrating our commitment to the highest international standards and playing a central role in shaping what those should be.
We also do what is right for UK markets.
The two are not mutually exclusive. Indeed, they are mutually supporting. Maintaining a strong and robust regulatory and supervisory system, and our commitment to achieving the highest international standards, go hand in hand with the UK’s position as a global financial centre.
Conclusion
So, as I step down as interim chief executive and away from the FCA board, I recognise the scale of the challenge for the FCA.
I’ve served with some exceptional colleagues and the FCA is lucky to have them. We’ve changed and improved many things about how we work, including in the last six months as we sought to protect markets and millions of consumers.
But the FCA finds itself – like the industry it regulates, like the society it regulates on behalf of, and the polity its regime is designed by – at a cross roads.
The coronavirus emergency, business models, technology and consumer expectations are coming together to pose a series of dilemmas that society, business and regulators will need to tackle.
As, if it does, the FCA must look ahead to the future but also behind it to take lessons from its past.
I wish all of my colleagues the very best as they rise to that challenge.
