Andrew Bailey speech at the Annual Public Meeting 2019

Speech by Andrew Bailey, Chief Executive of the FCA, delivered at our 2019 Annual Public Meeting.

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Speaker: Andrew Bailey, Chief Executive
Event: Annual Public Meeting 2019, London
Delivered: 17 July 2019
Note: this is the speech as drafted and may differ from the delivered version


  • We continue to dedicate significant resource to planning around EU withdrawal. 
  • We have delivered reforms to protect vulnerable consumers in sectors like consumer credit. 
  • While we have seen the conclusion of some longstanding issues this year, we must continue to remain vigilant in the face of emerging harms. 
  • We are putting the future of conduct regulation on the table and considering how we can best deliver in the public interest in a changing landscape. 


Thank you all for being here today. First things first – we can’t reflect on the year that’s gone without talking about the B-word. Brexit continues to occupy a lot of our time and resource. We have around 320 members of staff who are currently working on Brexit in some capacity. And up until a few months ago, when we were focused on contingency planning to be done by March, the number was even higher – around 450. We’ve published nearly 2,000 pages of consultation on changes connected to EU withdrawal. And Parliament has passed 60 statutory instruments (SIs) relevant to the FCA, with another 12 expected before 31 October.

The FCA does not take a position on Brexit per se – that would be inappropriate as a public body. Instead, our priority has been to ensure that, whatever the time or manner in which it occurs, consumers are protected and markets are prepared as far as possible – so we’ve been undertaking contingency planning for the full range of outcomes. We’ve also been developing views on what conduct regulation may look like post-Brexit. I’ll return to this theme shortly.

Understanding consumers

But of course, there is a world beyond Brexit. The regional visits I’ve been on in the last year, meeting consumers, charities, businesses and many others, have been a pertinent reminder of that.

Recently in Plymouth, for example, I heard from military veterans on the difficulties they face accessing credit.

Along with Financial Lives, our tracking survey of adults and their finances, these visits offer vital insight into consumers’ experiences, and provide a key source of information that underpins our consumer protection work.

High-cost credit

Central to this work is the duty to prevent harm to consumers. This year, we delivered wide-ranging remedies to prevent the excessive charges associated with high-cost credit, used by some 3 million people. We introduced a cap on prices and charges in the rent-to-own market, which will save consumers around £23m a year. We introduced a package of measures to tackle harms in the Buy Now Pay Later market, which we expect will save consumers around £40-60m a year. And we also tackled overdrafts, proposing changes to deliver simpler and fairer pricing. We expect the typical cost of borrowing £100 through an unarranged overdraft to drop from £5 a day to less than 20 pence as a result of our changes.

We know that the burden of excessive charges falls disproportionately on vulnerable consumers, with less than 2% of customers currently paying 50% of unarranged overdraft fees. So, this is an area where our interventions can make a real difference. And of course, we have already made a significant impact in this sector, with our cap on high-cost, short-term credit saving consumers £150m a year.


As well as thinking about the risk of harm consumers face now, we’re also looking at where challenges may arise later in their lives. Demographic shifts and economic trends are remaking the social contract across the generations. The combination of increasing life expectancies with continued low interest rates and the difficulty of building up savings for older age has the potential to create a serious challenge for consumers’ finances in the next stage of their lives.

Against this complex and evolving backdrop, we’re concentrating our energies on the interventions we believe can have the biggest impact. We have proposed a package of remedies to address the challenges identified in our Retirement Outcomes Review, including firms offering ‘investment pathways’ to consumers who do not take advice, to support their decision making, and pension investments not being defaulted into cash savings unless the customer expressly wishes it.

We have prioritised pension transfer advice, thoroughly examining the activity of firms in this space and engaging with industry to guard against harm to consumers. And we’ve published a discussion paper on non-workplace pensions to examine competition in this sector, with a view to publishing a feedback statement this summer.

SM&CR and culture

A vital safeguard against consumer harm is a healthy, customer-centric culture at the heart of every firm.

A vital safeguard against consumer harm is a healthy, customer-centric culture at the heart of every firm.

Through the Senior Managers & Certification Regime (SM&CR) we are driving forward a shift in industry, where there are clear lines of accountability between a decision made and the senior manager who made it. In December, we extended the SM&CR to all 560 insurers and have published near-final rules to extend the regime to 47,000 authorised firms not yet covered.

Beyond the SM&CR, culture continues to be an issue of the highest importance for the FCA. It is a central consideration for our supervisors, who look at drivers of behaviour, staff incentives and governance arrangements in their day-to-day interactions with firms.

Enforcement action

But, of course, sometimes behaviour in our regulated population falls short. Where we have seen firms violating our rules or not meeting our expectations, we have taken action.

Where we have seen firms violating our rules or not meeting our expectations, we have taken action.

This year, we issued 265 Final Notices, secured 288 outcomes using our enforcement powers and imposed 16 financial penalties totalling £227.3m. In December, we fined Santander £32.8m for serious failings in its probate and bereavement process. In April, we fined Standard Chartered £102.2m for poor AML controls. And last month, we successfully took 2 individuals to trial for insider dealing, leading to their conviction and imprisonment.

Financial Services Register

We also protect consumers through providing information via the Financial Services Register. We recognise that there are data quality issues in the 750,000 records it holds and that it needs to be made fit for the now larger remit of the FCA. That’s why we’ll be investing £5m in it over the next year.

SME finance

One issue that has caused a lot of frustration for our stakeholders is the question of where we can and can’t take action. This has been thrown into sharp relief by some of the issues we’ve seen concerning small and medium-sized enterprises (SMEs), where our powers to intervene are limited.

This year we increased the limit for complaints to the Financial Ombudsman Service to £350,000. This coincides with the extension of the service to SMEs – meaning an additional 210,000 small businesses will now be able to make use of it.

Of course, the issue of protection for SMEs has played out prominently in the case of Royal Bank of Scotland’s (RBS) treatment of customers transferred to its Global Restructuring Group (GRG). Given the gravity of the issues highlighted in the independent review, it was only right that we launched an investigation to see if there was any action we could take. Despite the seriousness of the issues at hand, the FCA’s powers to act in such circumstances at the time it happened are extremely limited, as we explained in our final report on GRG last month.


The issue of GRG goes back a long way, and has occupied much thinking over many years – making frequent appearances at these APMs. But while we must learn the lessons of the past, we must also look forward, and think about what kind of regulator we need to be to meet the challenges and opportunities of the future.

Technology is an important part of this. Innovation offers huge opportunities for consumer good – our Sandbox is testament to that. But it can also be an enabler of new forms of harm. We often see examples of this taking place today at the blurry edges of the regulatory boundary – where grey areas create opportunities for bad actors.

The question of what sits inside and outside this boundary – also known as the regulatory perimeter – is a matter of great importance for consumers and firms alike. It matters because it determines where consumers are protected, and where they aren’t; when we can take action, and when we can’t. In fact, we often find that the perimeter is the common thread that links some of the most challenging issues we deal with – mini bonds, cryptoassets, funeral plans and GRG are all examples of this.

We published our first assessment of the perimeter last month – an exercise we plan to undertake annually.

There is a growing impetus to grapple with this question now, as technology increases the speed of change in financial markets, and we continue to see examples of firms operating at the edges of the perimeter causing harm to consumers. At the same time, the long-term low interest rate environment has created a market of consumers looking for ways of boosting their savings – in an age where they need to last longer than ever.

In this environment, high-risk investments are increasingly marketed to retail customers. To be very clear, counteracting this should not be left to consumers alone. There is a responsibility to act in the public interest.

Future of regulation

Against this backdrop, it is right that we now put the future of financial conduct regulation on the table.

…any organisation that prioritises being within the rules over doing the right thing, will not stand up to scrutiny for long

A significant part of this debate turns on the issue of outcomes versus rules. Rules are a crucial mechanism for delivering outcomes, but can also be interpreted so rigidly as to become a box-ticking exercise. This is a lesson we want to see reflected in firm behaviour – any organisation that prioritises being within the rules over doing the right thing, will not stand up to scrutiny for long.

We view incidents like the Woodford affair as an example of this – where firms are following the letter, but not the spirit, of the rules. It raises questions about the rules themselves.

The UK’s exit from the EU provides important context here. While the post-Brexit future is unclear, it is fair to say that there are aspects of our regulatory approach that may have developed differently had they done so unilaterally. So, while the FCA takes no position on the substance of Brexit itself, we are using the opportunity of the UK’s exit to consider the future of conduct regulation – and how best to deliver in the public interest in this changing context.


This has been an exceptionally busy year for the FCA – and the next 12 months promise to be no different. While we have seen the conclusion of some longstanding issues this year, we must continue to remain vigilant in the face of emerging harms.

As always, we will be guided by our duty to act in the public interest. Accountability and transparency are crucial components of that.

In the last year alone, we have given oral evidence to parliamentary committees on 15 different occasions. No doubt we’ll be called many times more in the year ahead. And, of course, we continue to be answerable to the public we’re here to serve.