Chancellor Rishi Sunak overlooks Chris Woolard and chooses Nikhil Rathi to take the FCA forward into the post COVID-19 world.
There’s a new face at the FCA, but it’s not the man most expected. After a relatively positive stint as interim Chief Executive, Chris Woolard had been favourite to take the role on permanently. However, the decision to shun him in favour of Nikhil Rathi, boss of the London Stock Exchange, could have a number of implications for the future direction of the regulatory watchdog.
Woolard had been busy during his time as interim boss. He took on insurers who attempted to shirk responsibility for business interruption cover, he brought in his own QCs and hired law firm Herbert Smith Freehills to help the regulator deal with legal complexities and launched an inquiry into sub-prime lender, Amigo.
However, there is a sense that the FCA needs to be shaken up after the Woodford savings crisis, its failure to pre-empt the London Capital & Finance mini bonds scandal and the slowness of its response to malpractice in the investment sector.
Rathi, by contrast, is an outsider to the FCA and may bring a much needed freshness to the role while his track record of working in the Treasury may also have played a role in Sunak’s decision. Certainly his time at the Treasury may well help him to handle some of the upcoming challenges such as Brexit, although others may fear it makes him a little too close to Government.
The coming years will bring a number of challenges which could create friction between the FCA and Government. Rathi will do well to ensure he is seen to keep his employers at arm’s length and avoid any implication of political influence.
What to expect
As he takes his role, Rathi arrives at a pivotal time. The COVID-19 crisis has placed an enormous pressure on the FCA in maintaining its operations. It has already had to reset its priorities to ensure it can maintain the right focus despite the restrictions of the pandemic.
The financial world faces winds of change in the shape of new technology, climate change and a desire for greater accountability and better conduct. Each of these issues were front and centre of his attention as he set out his goals for the future.
The regulator also is fighting for its reputation. It has faced considerable criticism over the past few years and, like other regulatory watchdogs around the world, is under pressure to improve oversight and accelerate the conduct of cases. Rathi will need to hit the ground running and show that he can steer the regulator through the choppy waters which are on the way.