The FCA announced the appointment of Nikhil Rathi as its next CEO. He is due to start in the autumn and will immediately have his hands full. The new leadership has come at a time of significant change in the industry. As such, it is anticipated that Mr Rathi will be welcomed with high expectations on the job particularly due to the unanticipated pandemic delaying the majority of the FCA’s initiatives. This month’s insight outlines the areas of priority for Mr Rathi .

COVID-19 
As a result of the pandemic, many companies and individuals were forced to take out emergency loans. Consequently, this led to the FCA issuing an unprecedented series of initiatives aimed at protecting consumers in financial distress. 

Charles Randell, Chair of the FCA and PSR highlighted to banks that they would need an entirely new way to deal with personal and business debt, as the pandemic pushes more borrowers into arrears or default. The FCA under Mr Rathi’s leadership will need to balance the interests of financial service firms and their customers and ensure that lenders are not seen to profit from the pandemic as some did after the financial crisis of 2008.

Brexit
Mr Rathi is expected to have his hands full dealing with the UK’s exit from the EU. The challenge he is tasked with will revolve around the decision of the UK maintaining equivalence with the EU financial regulations or for the UK to establish its own rules when the Brexit transition period ends next year. Currently, the financial service groups are pushing for an agreement on equivalence. 

Depending on whether the government chooses to stick with the EU’s regulatory framework or move away from it, Mr Rathi will be responsible for minimising the disruption and ensuring that the interpretation of the rules maintains the UK’s status as an attractive location for financial service firms to do business.

Rebuilding trust with consumers
The FCA was heavily criticised for failing to protect consumers from a series of financial scandals prior to the pandemic. Examples of these include the FCA’s failure to prevent the collapse of Woodford, where former FCA CEO Andrew Bailey was described as being “asleep at the wheel”, and the failure of investment firms such as Beaufort Securities, SVS Securities and London Capital & Finance due to the unregulated nature of minibonds. 

Although the FCA has since permanently banned the mass marketing of mini bonds, it still faces pressure from clients who have lost money. In the future, the regulator will be required to act more quickly to stop suspect schemes that could harm clients under Mr Rathi’s leadership

We anticipate more publications on protecting clients to be issued by the FCA. 

Overall, Mr Rathi starting reign will be very important as he needs to take us through the transition of Brexit, the debt burden created by COVID-19 and mending the relationship between the regulator and consumers.