If one were to pen a letter to Father Christmas listing the most audacious political gifts imaginable, a wholesale regulatory retreat in the name of "growth at any cost" might have seemed too brazen even for the most impudent of wish lists. And yet, as if conjured from the fevered dreams of unchecked marketeers, that is precisely what the Financial Conduct Authority (FCA) has been served up—tied neatly with a Downing Street ribbon and a "Growth, Growth, Growth" tag affixed for good measure.
The prime minister’s missive to the FCA and its fellow regulators was as unsubtle as it was unambiguous: strip away those pesky regulatory encumbrances, ease the burden on market participants, and let the good times roll. And what was the FCA’s response? Not a defiant assertion of its statutory duty to protect consumers from the rapacious appetites of the financial services industry. Not even a vague commitment to maintain balance between oversight and enterprise. No, the regulator’s reaction was one of eager compliance, wielding its scythe against regulation with all the verve of a market fundamentalist freshly converted at the altar of Milton Friedman.
Internally, however, the mood is said to be somewhat less celebratory. Disquiet reigns within the corridors of the FCA’s labyrinthine headquarters, where some unfortunate souls labour under the misapprehension that their employer’s raison d'être is the protection of consumers, rather than the facilitation of corporate excess. Such quaint notions must, of course, be swiftly dispelled. The FCA’s mandate, once a sturdy bulwark against financial malfeasance, is now reduced to a malleable tool, bent to the whims of those who equate regulation with obstruction and consumer protection with needless fuss.
A Pantomime of Concessions
Take, for instance, the farcical episode of the FCA’s "name and shame" initiative.
Announced with much self-congratulation, the policy was intended to expose wrongdoing at an earlier stage, making public the identities of entities under investigation. Cue an immediate and predictable uproar from industry lobbyists, who lamented—without irony—that transparency might harm stock prices. The FCA, having momentarily played at being a serious regulator, quickly folded. New "amendments" were proposed, described with Orwellian flourish as a response to "the strength of feedback"—a euphemism for corporate pushback, if ever there was one.
The industry’s dissatisfaction, however, remains unabated. One can almost hear the collective grumbling in private members' clubs and City boardrooms: why won’t the regulator simply return to its rightful place as a pliant enabler of unfettered financial experimentation?
A Consumer Duty, or a Duty to Consumers?
The FCA’s recent dalliance with consumer protection—manifested in the much-vaunted Consumer Duty—now appears to have been a mere dalliance after all. No sooner had the regulator erected a scaffolding of supposed safeguards than it found itself ordered to dismantle the structure with almost comic expediency. Sara Woodroffe, the FCA’s head of consumer investments, recently proclaimed that "growth is the cornerstone of the FCA’s strategy," a statement so brazen in its prioritisation of economic expansion over consumer welfare that one might mistake it for a candid confession rather than a slip of the tongue.
Yet the regulator, ever mindful of optics, remains adept at the strategic caveat. Whenever "growth" is mentioned—and it is mentioned with near-religious fervour—it is accompanied by a hesitant, almost reluctant nod to consumer welfare. One imagines that within the FCA’s gilded halls, a team of spin doctors is permanently employed to ensure that every deregulatory initiative is liberally sprinkled with phrases such as "empowering consumers" and "driving better outcomes"—meaningless platitudes designed to mollify those who still labour under the illusion that the FCA is in the business of safeguarding the public.
The Treasury’s Puppeteer Act
For those naïve enough to believe that the FCA retains any meaningful independence, one need only look to its increasingly sycophantic relationship with the Treasury. Chancellor Rachel Reeves has been conducting a veritable grand tour of financial institutions, no doubt offering knowing nods and firm handshakes as she assures the industry’s captains that their interests will be prioritised. The FCA, meanwhile, waits in the wings, poised to receive its next set of instructions with all the deference of a dutiful servant.
The ongoing advice review, ostensibly designed to improve access to financial advice, is being watched with a mixture of anxiety and resignation by industry insiders. Will the FCA’s final verdict bear any resemblance to its original intentions? Or will it, as many suspect, be yet another capitulation, its findings carefully curated to align with Whitehall’s pro-growth dogma? The answer is, of course, depressingly obvious. The regulator cannot, in good conscience, be seen to support unbridled market expansion while simultaneously demanding that industry giants provide redress for past misdeeds. That would be too much like, well, regulating.
A Watchdog No More
The FCA’s transformation from robust watchdog to deferential lapdog is now complete. Its leaders, once capable of articulating a vision that balanced economic ambition with regulatory prudence, now parrot the government’s pro-growth mantra with unsettling enthusiasm. The agency’s slow surrender is not merely an institutional failing but a betrayal of the public it purports to serve. A regulator whose primary duty is consumer protection cannot, in good conscience, become an accomplice to the very forces it was established to constrain.
But conscience, it seems, is no longer a guiding principle. Growth, we are told, is paramount. And if that growth must be fuelled by regulatory laxity, by diminished oversight, and by a wilful disregard for the consumer interest, then so be it. The City cheers, the Treasury nods approvingly, and the FCA—ostensibly an independent regulator—dutifully complies.
Thus, we witness the denouement of yet another political farce: a once-credible institution reduced to little more than a rubber stamp for the ambitions of those who see regulation not as a safeguard, but as an impediment to be overcome. And as the FCA continues its inexorable retreat from its founding principles, one is left to wonder: when the next financial scandal inevitably unfolds, who will be left to feign surprise?
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