Maintaining high regulatory standards rather than having a “competitiveness” mandate is the best way to preserve the City of London’s status as a dynamic financial centre, the Financial Conduct Authority’s incoming chief said today.
Britain will no longer have to comply with European Union rules after December when transition arrangements that followed Brexit in January end. This raises the prospect that some of Britain’s financial services rules could be eased to bolster the City of London.
But future direct access to the EU financial market will depend on Britain’s rules remaining “equivalent” or aligned with those in the bloc.
“I have never been a massive personal fan of it,” Nikhil Rathi told a confirmation hearing in parliament’s Treasury Select Committee, referring to competitiveness as a policy goal.
A formal competitiveness objective for the FCA would complicate decision making, Rathi said.
“We have a starting point where the rules are pretty much identical,” he said.
But Rathi also said there needed to be strong cooperation between the FCA and its EU counterparts to build up trust and avoid questions about the motivation behind any adjustments in UK rules that could jeopardise EU access.
“It will be important for the UK to have a good degree of freedom to develop rules, not just in terms of content, but the pace at which changes are made,” he said.
Rathi takes up his £455,000-a-year post in October after a senior role at the London Stock Exchange, and as an official in Britain’s finance ministry where he helped to deal with the aftermath of the financial crisis a decade ago.
He said exiting the Covid-19 crisis would be a challenge for the FCA which must ensure that vulnerable consumers are treated properly and that competition is not eroded as some financial firms go bust.
“I have not applied for this job to be liked,” he said.