Friendlier, but watchdog will still have teeth

The new City regulator is going to adopt a more conciliatory tone but, its chief warns, that doesn't mean its predecessor's hard line will be entirely jettisoned

Martin Wheatley showed the softer side of his personality as he outlined his vision for the UK's new regulatory framework.

Gone were the barnstorming threats that seem to have characterised his nine-and-a-bit months as chief executive-designate of the Financial Conduct Authority. Instead, the former London Stock Exchange executive appeared to be in a conciliatory mood ahead of the regulator's launch next month.

"You won't hear from us a 'be afraid' tone, that is not how we want to act," he said in what some might interpret as a dig at the tough language used by Sir Hector Sants, the former boss of the Financial Services Authority.

"We want to have a more predictable relationship with financial services firms – in this industry prevention is better than cure."

Mr Wheatley's FCA is part of the biggest regulatory shake-up the country has seen since the election of Tony Blair's Labour government in 1997.

The FSA, which was created by the then-Chancellor, Gordon Brown, is to be disbanded at the start of next month, having been widely criticised for its role in the lead-up to the financial crisis and the collapse of banks such as Northern Rock.

In its place will be the FCA, which will take on responsibility for policing the financial markets and the Prudential Regulatory Authority, which will make sure banks, building societies and insurers are financially stable.

Mr Wheatley, who was drafted in from a stint in Hong Kong to oversee the transition, admitted the relationship between financial regulators and the industry needs to improve after successive mis-selling scandals and the Libor fixing debacle. However, he insists the hardline approach adopted by the FSA in recent years will not be entirely jettisoned.

"The fact that the FSA focused on both conduct and prudential regulation made it difficult. From the moment Northern Rock collapsed, the conduct part did not get as much attention. We want to be a credible deterrent rather than just punishing companies.

"We will be on the front foot, though, when we see things we don't like. We have a broad tool kit and when we need to negotiate hard, we will negotiate hard. I don't think any of the banks expect us to be a pushover."

Mr Wheatley is certainly under pressure to win over a sceptical public, which has lost faith in regulation as the financial services industry staggers from one crisis to the next.

"The FCA is taking over from a body which failed consumers badly," Andrew Tyrie MP, the chairman of the Treasury Select Committee, said earlier this year. "If it simply picks up where the FCA left off, consumers will suffer again.

Mr Wheatley has already outlined his thoughts on many of the key issues facing the FCA, including the Libor scandal, on which he published a wide ranging report last year.

At the time, he called for a complete overhaul of the key interest rate-fixing system after he said it had been broken by banks.

Mr Wheatley's report made a number of major recommendations. These included introducing a new regulatory structure for Libor, with criminal sanctions for those who attempt to manipulate it; transferring oversight of Libor from the British Bankers' Association to a new body; and requiring banks to back up their submissions with evidence of relevant transactions.

Speaking today, he said he was also concerned that financial services firms could exploit consumers on the hunt for high-yielding returns.

He added that low interest rates and inflation were forcing savers to consider the kind of investments that could eventually hit their pockets.

"People should of course be allowed to invest their money as they wish. However, we must ensure that financial services providers make sure that the risks involved are clear."

For experts, the FCA's success will be measured by the relationship it builds with banks and other financial services providers in the UK rather than the fines it hands out.

Today's conciliatory tones went some way to promising this although concerns still remain.

Calum Burnett, the head of banking litigation at Allen & Overy, said: "There is a risk that the FCA will let the pendulum swing too far towards becoming enforcement-led.

"It will have a lot of powers, and its challenge will be to strike the right balance of using them credibly but still maintaining a constructive relationship with the banks it regulates."

For now, Mr Wheatley and his chairman John Griffith-Jones are fully aware that the court of public opinion is waiting to pass judgement.

"The FCA's in-tray is like a conveyor belt of issues coming through." Mr Griffith-Jones said. "What we are doing is going to be under great scrutiny."

Suggested Topics
Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Sport
Karen Dunbar performs
Entertainers showcase local wit, talent and irrepressible spirit
Sport
Members of the Scotland deleagtion walk past during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
PROMOTED VIDEO
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
i100
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

PMO Analyst - London - Banking - £350 - £400

£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

Commonwealth Games 2014

Great Scots! Planes and pipers welcome in Glasgow's Games
Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

Jack Pitt-Brooke

Manchester City and Patrick Vieira make the right stand on racism
How Terry Newton tragedy made iron men seek help to tackle their psychological demons

How Newton tragedy made iron men seek help to tackle their psychological demons

Over a hundred rugby league players have contacted clinic to deal with mental challenges of game