New broom at UK financial watchdog starts sweeping changes

By Huw Jones
·2 min read

By Huw Jones

LONDON (Reuters) - The new boss of Britain's Financial Conduct Authority has begun a root-and-branch internal shake-up just over a month before the country's full departure from the European Union will give the watchdog new rule-making powers.

The FCA faces the tricky task of helping the financial sector navigate Brexit in the face of pressure from lawmakers for regulators to bolster the industry's global competitiveness.

The City of London's finance industry faces being largely cut off from the EU, its biggest customer, as Brussels adopts a hard line on financial services which are not included in ongoing talks on a UK-EU trade deal.

CEO Nikhil Rathi, a former Treasury official who took up the reins last month, told staff on Monday that the transformation aims to make the best use of resources and build on lessons learned during the pandemic.

Under the revamp, the watchdog's retail and wholesale supervision divisions will be combined and merged with policy and competition functions, the FCA said in a statement on Thursday.

The new merged division, which will come into effect in the New Year, will have two executive directors, one focused on consumer protection and competition, the other on protecting and enhancing financial markets.

Jonathan Davidson, who was executive director for retail supervision, told an online event on Thursday that he will not apply for one of the two new roles.

"At the FCA, as part of our transformation programme, we are going to restructure to integrate the supervision and policy functions to take a holistic view and approach to the challenge of making financial markets work better," Davidson said.

Davidson said he is becoming a senior adviser on financial services and the FCA’s purpose and approach to sustainability in preparation for the COP26 climate conference in Britain next year.

Megan Butler, who headed wholesale supervision, has been appointed as executive director to lead the transformation.

Christopher Woolard, the executive director who headed competition and was interim CEO of the FCA until Rathi started in October, had already announced he was stepping down to head a review of consumer credit.

From January, Britain will be able to write its own financial rules and Rathi has already begun ditching some proposed new regulations to free up resources to deal with the pandemic.

(Reporting by Huw Jones. Editing by Jane Merriman)