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New FCA boss Andrew Bailey faces ‘policy vacuum’ post-Brexit

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The new FCA chief executive Andrew Bailey is expected to have to deal with a “significant policy vacuum” in the aftermath of the Brexit vote.

The former Bank of England deputy governor and Prudential Regulation Authority head began his new role as FCA boss on 1 July.

Bailey succeeds Tracey McDermott, who was been interim chief executive since Martin Wheatley was forced out of the regulator by Chancellor George Osborne in September 2015.

Law firm Pinsent Masons insurance director Tobin Ashby says Bailey has joined the FCA at “a critical time” but believes with his background he could be a good person at times of instability.

He says: “Bailey will have a macro-scale view that others might not have but it will be very difficult for him to get to grips with his role, especially looking at the next few months and years.

“I wouldn’t be surprised given his background if he’ll try to keep momentum and maintain the same direction of travel in the approach to European regulations as the FCA has now.”

Independent consultant Richard Hobbs says there are already calls for many initiatives from the FCA and other regulators to be put on hold because of the Brexit vote.
He believes uncertainty about when the UK formally begins the process of leaving the EU will put a block on further regulatory developments.

Hobbs says: “Until Article 50 is invoked, we’ll get a significant policy vacuum that Bailey can’t do anything about. No one’s going to have energy for that because no one knows what the future holds.

“That said, the UK regulatory regime won’t change for now because the largest financial institutions need access into Europe.”

Apfa director general Chris Hannant says Bailey’s arrival does not mean “we are not going to see the FCA change overnight”.

He says: “The regulator’s priorities remain the same, including the Financial Services Compensation Scheme review or making sure we can see ready access to advice for a wider population. The FCA also needs to look again at the Financial Advice Market Review, hopefully before 2019.”

Hannant says the question mark over the next steps post-Brexit remain, especially around how firms will need to cope with European regulations such as Mifid II and Priips.

He notes the regulator will need to adapt based on whether the equivalent EU legislation needs to be applied in the UK and whether the UK continues to be part of the single market.

Hobbs adds: “Bailey is better plugged into the Treasury and Bank of England than his predecessor but it’ll be some time before we can see any change of direction at the regulator,if indeed we see any at all, given the Brexit vote.”

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