FCA to be less risk averse, says CEO

In a speech delivered to the Lord Mayor’s City Banquet at Mansion House (22 September), Nikhil Rathi added that the main topic of discussion in these meetings is online safety for retail financial service consumers.

In what was his second Mansion House speech in charge of the regulator, Rathi also said it would be moving away from being a risk averse organisation. He explained: “We have often been criticised for acting slowly or with too much risk aversion. This is changing.

“We are applying a bolder risk appetite in dealing with serious misconduct, including, as you will have seen, using criminal powers in the most serious cases involving financial crime or money laundering. We will litigate more if we need to, recognising we won’t win every aspect of every case but also appreciating that legal certainty can provide considerable benefits for industry as well.

“We have a good dialogue with the government and will be publishing our third annual perimeter report next month, sharing our views on how the regulatory framework might evolve. This meets our commitment to parliament, a key mechanism of our accountability which will only intensify in the coming years.”

He also said the FCA is changing its listing rules to “ensure investor protection” but also support new sectors and new forms of capital raising. The reforms were introduced in August, and more will follow later this year and next.

As for the organisation’s data and digital ambitions, it’s taking an international approach with its Global Financial Innovation Network. Through this, the FCA relaunched its testing initiative for firms examining innovative products or technology cross-border, with 23 regulators across five continents participating.

Rathi also said the FCA would be regulating more data-heavy businesses. And as demand for data increases, firms may be able to use, market or restrict data in ways that create poor user outcomes.

He added: “Our wholesale data Call for Input showed that some market participants believe trading data licensing fees are complex, benchmark switching costs are too high and data vendors are subject to high barriers of market entry.

“We’ll be publishing feedback before the end of the year and setting out what further steps we may take, considering the full range of our powers. Earlier this year, we joined the Digital Regulators Cooperation Forum, or DRCF, a partnership with Ofcom, the Information Commissioner’s Office and the Competition and Markets Authority.

“While we have independent powers and objectives, we will achieve them more effectively by deeper cooperation and developing common capability, including artificial intelligence and data ethics.”