Covid and Brexit – the challenges that face new FCA boss Nikhil Rathi
22 June 2020, 13:04
Predecessor Andrew Bailey was often criticised for the regulator’s failings, including in the £237 million London Capital and Finance scandal.
The new chief regulator of the City will take over at an often criticised organisation with a major new path to chart after Brexit.
Nikhil Rathi was unveiled as the chief executive of the Financial Conduct Authority on Monday.
Mr Rathi will face a battle to only take over the job and leave behind some of the baggage of his predecessor Andrew Bailey.
Mr Bailey, who has gone on to lead the Bank of England since stepping down from the FCA in January, was long a punching bag for many of his critics.
He had made so many enemies during his time in charge of the regulator that campaigners demanded a rethink after Mr Bailey was unveiled as the UK’s top banker.
At the time he stepped down, Brexit seemed to be the biggest challenge that Mr Bailey’s successor would face.
“Leaving the EU will create a new political, legal and economic environment for firms and regulators,” chairman Charles Randell and interim chief executive Christopher Woolard said in April as they laid out the FCA’s business plan for the coming year.
It will now fall to Mr Rathi to fulfil the vision laid out by his new boss to keep the UK at the centre of the global financial markets.
But the economy has changed in ways that no-one could have predicted at the beginning of the year and while Mr Bailey has been forced to take big decisions to prop up the economy, so too Mr Rathi’s first months will be dominated by the coronavirus pandemic.
The regulator has been forced to put several schemes on hold as it focused all its attention on the mitigating the impact of the outbreak.
The FCA says it has been focused on keeping markets open during the massive economic downturn, ensuring that people still have access to bank services and helping consumers weather the immediate shocks.
The watchdog will also need to look out for unscrupulous people and businesses trying to take advantage of the crisis.
It will need a plan for how to deal with the years-long fallout that is likely to come from Covid-19.
But Mr Rathi will also have to deal with the fallout from some of the skeletons left in Mr Bailey’s office.
Later this year, former Court of Appeal judge Dame Elizabeth Gloster is set to publish a report into the FCA’s handling of London Capital and Finance.
Investors face losing up to £237 million that is trapped in the failed scheme and have attacked the FCA for ignoring repeated warnings.
“The FCA was the cause of this collapse because they kept this under wraps,” one angry investor told Dame Elizabeth during a meeting in January.
In April, the FCA set out its key priorities for the next three years. They include making faster and more effective decisions, helping retail investors make the right decisions and ensuring that payments are safe and accessible.