|Nikhil Rathi recently began his tenure with the Financial Conduct Authority as its new chief executive. Previously a senior executive at the London Stock Exchange, Rathi takes the helm of the financial regulator just as the UK is battling to contain a second wave of the COVID-19 pandemic and as policy-makers begin to determine how the region’s finance sector will adapt to life outside of the European Union. How the FCA handles this era will set pressing questions before Rathi.|
Should the FCA toughen up its approach to enforcement? How can it strictly police a sector that could also be under significant pressure to remain a competitive financial center? Can the FCA help the UK retain its position as a fintech hub?
Earlier this year, the FCA confirmed it would delay up to two-thirds of its regulatory initiatives as a result of the virus crisis. Rathi will be under pressure to get those initiatives back on track given fears that the pandemic will have led to an uptick in misconduct in the UK market.
The Financial Times reported that the regulator took significantly less action over financial misconduct at the start of the pandemic. For instance, only 36 new enforcement cases were opened between March 1 and May 31 this year, compared with 148 during the same period in 2019. However, more FCA warning notices were issued during the period around the lockdown.
The FCA has said that fewer enforcement cases does not mean it was overlooking wrongdoing. “Enforcement has continued as normal during the pandemic,” said a spokesperson. “The FCA will open cases where it suspects serious misconduct, with the number of new cases fluctuating month on month and year on year. “
Douglas Cherry, a partner at law firm Reed Smith also said, “Whilst not relishing the prospect, we should all expect the regulator to be back, with its foot firmly on the gas.”