The new chief executive of Britain’s top financial regulator has said he is not afraid to rub people up the wrong way in pursuit of justice for consumers and has promised to maintain high standards post-Brexit.
“I haven’t applied to this job to be liked,” incoming Financial Conduct Authority (FCA) chief executive Nikhil Rathi told MPs on Wednesday.
“I wouldn’t want to define myself as feared either. I’d like the FCA to be defined as tough, as assertive, as thoughtful, as decisive and working with pace, agility and proactivity.”
Rathi made the comments during a confirmation appearance in front of the Treasury Select Committee on Wednesday afternoon. The Treasury named him the next FCA boss last month and Rathi is set to take up the post in autumn.
Rathi came across as mild-mannered during Wednesday’s select committee hearing and at times seemed stumped by some of the questions. At just 40, he is the youngest leader of the watchdog and his assent came as a surprise to many. He was previously chief executive of the London Stock Exchange but had a relatively low public profile.
Rathi said his priorities at the FCA will be to modernise its use of data and to improve diversity, promising unconscious bias training and no-name CVs.
He said there were “deep issues” with diversity in the City and said recent Black Lives Matter protests had “touched a nerve in many organisations.” Rathi said the FCA should lead by example when it comes to diversity.
Beyond improved representation, Rathi said he would put consumer protection “at the heart of how I think about my role at the FCA.”
“We are dealing with an extraordinary situation where we have millions of consumers around the country facing very difficult circumstances and many vulnerable consumers in particular facing challenges,” Rathi said.
“In the short-term, a core focus is going to be on how to manage the smooth return hopefully to normalcy as we come out of the pandemic.”
He signalled that the FCA complaints process could be overhauled as a result.
“To build consumer confidence, consumers need to feel that justice is done when they raise an issue,” he said. “Therefore a complaints process is not just a bureaucratic process, it is part of the delivery of objectives and building consumer confidence in our work.”
The FCA enjoys a broad remit over UK finance and is charged with protecting consumers, promoting competition, and ensuring market integrity. The three mandates do not always balance neatly and the job has a reputation as a poison chalice.
Rathi’s predecessor, Bank of England governor Andrew Bailey, also promised to put consumer protection at the heart of his agenda when he took up the role.
However, he drew anger from many investors who lost their money in scams like London Capital & Finance or in through the collapse of Neil Woodford’s investment company. The incidents led to accusations that Bailey was “asleep at the wheel.”
“It’s not a job I think you can take if you want to be liked,” Rathi said.
Aside from consumer protection, Rathi must also navigate Brexit.
There are fears that the UK could loosen standards and launch regulatory race to the bottom after exiting the EU. But Rathi promised “high quality standards that would stand up to scrutiny anywhere in the world.”
He said most finance firms were prepared for Brexit but said a failure to reach a trade deal by the end of the year would still prove a “completely disruptive change.”
Rathi spent the bulk of his career at the Treasury advising senior government ministers. Asked if he felt comfortable challenging the government, Rathi said he would “not hesitate” to stand up to Downing Street if he disagreed with policy.
“If there are times when I need to call something out, then I will,” he told MPs.
However, he struggled to answer convincingly when asked how we would avoid being swayed by private sector businesses that may offer him a job when he leaves the FCA in five years time, a possible conflict of interest that could prove challenging. Rathi said he had not thought about his long-term career prospects and described getting the FCA job as a “whirlwind.”
Rathi disclosed he will be paid £455,000 ($578,836), plus pension contributions with no bonus.