FCA appoints LSE chief Nkihil Rathi as new CEO
The Financial Conduct Authority (FCA) has appointed Nikhil Rathi as its new chief executive officer (CEO) for at least the next five years.
Rathi will be stepping down from his current role as the CEO of the London Stock Exchange (LSE).
The UK’s Chancellor, Rishi Sunak, called Rathi “the outstanding candidate” to lead the country’s financial regulator. Director of LSE Group’s international development, Rathi previously worked at the Treasury for more than four years, and served as private secretary to prime ministers Tony Blair and Gordon Brown between 2005 and 2008.
The new permanent CEO will take over from interim CEO, Christopher Woolard, who was appointed to lead the FCA in January 2020, spearheading the regulator’s response to economic disruption caused by coronavirus. Rathi will take up the post in the Autumn.
Woolard was thought to be a strong contender for the permanent post, having worked at the regulator for seven years. This year, he ensured borrowers received extended repayment relief, and brought a test case to the High Court determining the insurance payouts owed to small businesses.
The other two main contenders for the post included Hong Kong’s Securities and Futures Commission’s CEO, Ashley Alder, and the FCA’s current head of supervision, Megan Butler.
The FCA says Rathi will earn an annual salary of £455,000, with 12% going into his pension, but no bonuses or benefits will be paid. In addition, Rathi is to give up any remaining interests in LSE Group shares when he joins the FCA.
The regulator’s chair ,Charles Randell, says the new CEO “brings both private sector management skills and experience of domestic and international regulatory policymaking”. Sunak added that Rathi’s “wide-ranging experiences across financial services” make him a suitable choice for the regulator’s “ambitious vision”.
Anti-money laundering (AML) solution provider SmartSearch’s CEO, Martin Cheek, highlights “the increased threat of financial crime” that financial services firms have faced during the coronavirus, and the need for the FCA to tackle this.
“There are still too many firms operating outdated processes that have not kept pace with the increasingly sophisticated methods employed by criminals,” says Cheek.
In February, the FCA – which fines firms for data breaches – admitted to its own data breach after victims of the collapsed savings firm London Capital & Finance (LCF) were sent messages by scammers.
Many LCF customers also complained about the FCA’s conduct surrounding the firm’s collapse, after it was revealed that the regulator had repeatedly failed to act on warnings from whistleblowers.
Rathi says his predecessor, Andrew Bailey, governor of the Bank of England, had left a “strong legacy”. But Bailey’s tenure was mired with several high-profile financial services firm failures, including the collapse of LCF and Neil Woodford’s investment funds, as well as peer-to-peer lenders Lendy and FundingSecure.
Transparency campaigner, Gina Miller, called Bailey’s leadership of the FCA a “tsunami of failure”. But Bailey has defended his leadership, arguing that the regulator’s focus shifted in 2014 from big firms to wider market oversight including the consumer credit sector.
“In the broad world of consumer credit, a lot of stones were turned over and it didn’t look good when it came out,” Bailey told a committee hearing with the Treasury in March ahead of his governor appointment.
“When I arrived in 2016 that problem [consumer credit] was not solved,” added Bailey. “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.”
Rathi confirms that the FCA will continue to focus on vulnerable consumers, as well as on “embracing new technology”, and tackling climate change.