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Can a leopard change its spots? ‘Repurposing’ UK conduct regulation

Thinkpiece 98

Much of the debate around the splitting of the old FSA into two had focused on the structural implications of regulation, but only know is the potential implications of the culture of regulation, particularly under the FCA as conduct regulator becoming clearer. 

Richard Hobbs runs his an expert eye over some of the new emergence themes - the new competition powers, the focus on behavioural economics, the challenge for firms to understand and engage with the new culture rather than merely don compliance helmets.

Above all, can the regulators escape from their current vulnerable political position and risk a more adult relationship with its regulated community amidst the glare of public scrutiny over financial services?


In many respects, the advent of the Financial Conduct Authority (FCA) is nothing new. Financial regulation has been reformed a number of times over the past quarter of a century. However, there are signs of a fresh approach to conduct regulation by the FCA.

There has been change in the objectives of conduct regulation. The FCA has been given an overall strategic objective (to ensure that markets function well) and supplementary objectives - including the new 'promotion of effective competition in the interests of consumers'.

The FCA is setting a lot of store in behavioural economics - in contrast to its predecessor, the Financial Services Authority (FSA). Such an approach suggests an organisation open to, and willing to embrace, change.

Although there has been little immediate staff turnover between the FSA and FCA, the latter's recruitment priorities, including hiring competition economists and former practitioners, highlights another shift in regulatory direction.

Despite being a "new organisation", the reality is that the FCA remains a political football, as the FSA was before it - providing ministers with protection when things go wrong.

As the FCA tries to shake off the past and create its own, innovative path, it will need the help of firms. The industry should be prepared to put its best foot forward, ensuring that the good of the consumer is at the forefront of their mind.

The jury is out on whether conduct risk regulation will change in the UK - but the initial noises coming out of the FCA regarding a different approach are positive. The question is whether politics and the industry will enable this to happen.

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