Andrew Bailey has defended his tenure as boss of the City regulator during a time that saw a number of high-profile failures of financial services firms.
Bailey (pictured), who served as chief executive of the Financial Conduct Authority (FCA) since 2016, was grilled by the Treasury select committee of MPs ahead of his appointment as governor of the Bank of England (BoE) on 16 March.
Bailey was in charge of the City watchdog at the time of the collapse of mini-bond provider London Capital & Finance, peer-to-peer lenders Lendy and FundingSecure and the gating of Neil Woodford’s investment funds.
Lendy’s collapse was cited as a reason why the review should be held into whether Bailey should be appointed BoE governor by transparency campaigner Gina Miller, in a recent report demanding a review into his new appointment.
It has also recently emerged that investors in collapsed firms wanted a say over the new BoE boss.
Bailey said that the focus of the FCA changed in recent years, moving from scrutiny of the conduct of big firms to wider market oversight including regulation of the consumer credit sector from 2014.
“That brings a much bigger population and one that has problems and had not been in the regulated arena,” Bailey said at the committee hearing.
“When I arrived in 2016 that problem was not solved. When I arrived as chief executive it wasn’t an institution in a good way at that point, so we set up tackling that problem.
“In the broad world of consumer credit, a lot of stones we turned over and it didn’t look good when it came out.”
Bailey said that the FCA set up a mission statement, redefining its supervision and operations.
“Out of that came a lot of issues, a big issue was high-cost credit,” Bailey said.
“When refocussing the FCA’s approach, we were going to have a particular focus on vulnerable customers, those less able as consumers to fulfil their duty of consumers to act for themselves.
“It was a very deliberate one and we were very hard on that. Things have happened during that period, things that I wish didn’t, as we came to grips with this problem and I think those stories are stories that I wish didn’t happen but we had a huge task on our hands to take on that challenge.
“I think it’d have been better to take that on earlier.
“It involved a huge amount of change. The idea we were slow and cautious and not doing much was not how it looked within the institution.”
With regards to London Capital & Finance’s collapse, Bailey said that there was a culture within the FCA of not prioritising firms that sat beyond its perimeter.
“The FCA has a large body of firms and large landscape it operates on and a complicated perimeter,” he said.
“Historically the FCA took the view that things that went beyond the perimeter or beyond the boundary of the perimeter were less of a priority than things inside of the perimeter.
“It’s incumbent to us to make it clear to you and the government change it.”
Bailey said the regulator has improved during his time as chief executive.
“I went to the FCA because it was a fascinating job,” he said.
“I think I can honestly say the FCA is a changed organisation and we’ve done a lot in that time.
“I’m proud of what we’ve achieved, I’m not proud of some of the things that happened during my time. We’re not going to hide anything in terms of what’s going on.
“The FCA is a very different organisation. There is more to be done but there will always be more to be done in an organisation like the FCA.”