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FCA chief Martin Wheatley: Too easy to blame regulator for lack of innovation

FCA chief executive Martin Wheatley has accused the financial services industry of using regulation as an excuse for not taking risks or innovating.

Speaking at a Lansons conference in London today, Wheatley admitted Governments and agencies have been slow to react to technological change in the past.

But he said: “It’s too easy to claim that regulation is always to blame when creativity or innovation slows in financial services. 

“It’s no secret that regulators are sometimes used as a shield for firms who simply don’t want to take the risk, so prefer to say that we’d probably stop them anyway.

“So, not a one-sided story here; but regulation clearly should be fleet-footed enough to support progress.”

Wheatley said it is a key objective of the FCA to ensure positive technological developments are supported by the regulatory environment.

He said: “The most immediate priority here for us – and the most pressing I think – is to ensure tech-led improvements to customer experience can be safely fast tracked into the UK.

“And to help this happen, the FCA is working closer than ever before with financial service firms who are developing innovative approaches to service that aren’t explicitly covered by regulatory rules – or where the guidance looks ambivalent.”

He said an important question is whether investment advice “can be automated to deliver returns and security for consumers with straightforward needs”.

Wheatley said technological fraud and data misuse or loss present a “challenging” picture for the industry and create a particular risk in the UK due to the “vulnerability” of firms with legacy systems.


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There are 15 comments at the moment, we would love to hear your opinion too.

  1. If it is not the regulator to blame who is it. The regulator is putting so much restriction on advisers, providers etc that why should any company bring a new product to market only for the regulator to say at a later date it was not compliant

  2. What a Tw*T!
    Innovative services that are not Regulated – what the heck has that got to do with the regulator????

  3. Exasperated Me 10th June 2014 at 5:50 pm

    If the cap fits..

  4. It is too easy to blame the FCA as Regulator for errors and mistakes – because they are to blame. Martin Wheatley claims there a lack of . . . . creativity – the REALITY is his Regulatory Office The FCA and enforcement officers condemn advisers . .. to vast amounts of wieldy and unnecessary administration that his office do not look at EG Gabriel . Wheatley wishes to remove risk . . . .from investments – and is unaware that one of the biggest risks is to deposit money in one of his Insolvent Banks . . . . .EG LloydsTSB Group Nationwide . . .Robbing Bank of Scotland etc., If only he would concentrate on providing any proper mechanism – to permit trade to be carried on – rather than block creativity – through senseless regulation – which has demonstrated over decades – It Does Not Work ! The changes he employed with RDR – has destroyed so many businesses and so many advisers – BUT Mr Wheatley refuses to acknowledge this . . . .but then he ” Can Ride Out ” whenever he likes leaving those committed to providing advice – NOT Guidance ” – Not Opinions ! NOT Restricted . . .just sheer common sense . . . .Advice on how best to solve a problem – seek a clients objective – then aim to achieve it ! Keep It Simple Stupid ( KISS ) was an old American term used in days of old – when the insurance companies were no tup for their Fire Sale – to the Americans as they are now !

  5. That the Regulator stifles innovation is perhaps to a certain degree its job. We have seen some of the cutesy ideas that never should have seen the light of day in the first place.

    However the greatest impediment both to the providers, the advisers and the Regulator – is the Government. Not just this one, but most of the buffoons. I find it amazing that Government just does things without passing it by the Regulator first – just to see if the idea is robust. After all with stupid initiatives from Westminster, the Regulator is always having to play catch up.

    When it comes to savings we are now back to where we were about 20 years ago, but without inflation linking. We had PEPs (£7k) Single Company PEPs (£3k) and TESSAS. In all amounting to £11,800 per annum. (With £3k to kick off a TESSA.) We have now just got back to a £25k ISA. Wow!


    How much worse would we be today if the Westminster numpties would have suffered a Guy Fawkes moment back in 1985 – and we stayed with 226 Pensions and EPPs?

  6. Now what’s the saying ?

    The FCA “IS” the problem not the solution so stop being the problem and start being the solution !!

    The trouble is we as an industry, have and are still paying out millions for “innovative” well basically crap products, providers and services ! the regulator levy heavy fines for system and control failures and hands out 166’s (very expensive for the recipient) when their limited knowledge fails them.

    Its little wonder companies fail to invest in innovation when the cost of an unfortunate hiccup is bankruptcy ?

    Its a little bit like when the FCA say the industry is over complicating compliance ? you may be right (I very much doubt it) but get it wrong and oh dear straight to the nearest cash machine draw out your money for the 166 and start looking for a new job !!!

    Am I being a bit over dramatic ? No I don’t think so !!!!

  7. The arrogance is unbelievable. But this is a direct result of the lack of answerability and demonstrates why setting up a regulator as a private company is complete nonsense.

  8. How can this chap justify his £650K salary?

    The reason there is no innovation Martin is the FCA has piled advisers with paperwork, regulate to the hilt and apply excessive charges, and operate in a regime that intimidates advisers into too scared to look at innovation as the FCA provides very little guidance and then wants to prosecute advisers retrospectively. This is what will damage new industries such as crowdfunding which should be working closely with the advising community. Project innovate sounds like a step in the right direction, though imagine it will be run by people without an innovative bone in their body – why would you when you are paid what Martin is?

    It is hard to innovate in a suffocating environment Martin.

  9. Like an NHS Trust , and School Trusts . . . . . .. they do not know what they are doing – pay no heed to those who do . . . have no respect for those who are ( or in the case of RDR /FCA ) do know what they are doing – and the FCA . . . .care even less about consumers. FCA Foolish Cameron’s Authority ?

  10. Encourage with content empty platitudes; keep your real program close to your check; take action against anyone who you believe is not running their business according to the rules discussed around a table in a closed room. And above all do not engage with anything constructive specified by the industry.
    Are these not the rules written on the wall of every room within Canary Wharf.
    If an organisation is accused of inhibitory behaviour is it not more sensible to determine whether the comments have merit, and react accordingly, rather than continually blaming everyone else.
    If the FCA believe that the industry is inhibited on risk taking because of regulation then do the adult thing – take responsibility for the fact that the accusations may have merit.

  11. brian weatherley 11th June 2014 at 2:53 pm

    Of course it is easy to blame the regulator for the lack of innovation. Quite simply it is not innovative

  12. A Regulator should set the Rules. However they cannot do this because they kno wnot what they are doing ! The Regulator. . . .in thei rmany forms from PIA to FSA to FCA to . . . has destroyed thousands of advisers and thousands of adviser businesses as a consequence. Insurance companies and product providers and Banks . . .UNDERMINE the Rules – through gross negligence of ” Complaince departments “, or the decision by Boards of Directors – who fancy their chances , of profiteering without being caught. The Real Reason they can do this is THERE IS NO DETERRENT for executives – who act and continue to act . . .however they please Willy Nilly . . . under the noses of the Regulator – whilst Martin Wheately wants a discussion on what is guidance what is advice – the two tier service of MAS – “advisers”, who cannot advise ? Someone needs to knock their heads together – and provide leadership . . . on services. We know financial services are dysfunctional – a result of commission orientated product flogging . . . but does not every other industry sell a product ? E.G Tesco from
    ” Beef ” Burgers – to their . . ” fishy” fingers – not only used in their sums and counting of profits. As the adverts say at Tesco Every Little Helps “, Tesco , and so it is . . . with Banks and Insurance companies. How can such large multinational organisations – get away with it ! and who is going to stop them ? The consumer . MOve banks ! Move insurance company product provider ! . . .” Move em out “, Rawhide ! If the Regulator won’t work – Move Out !

  13. Julian Stevens 11th June 2014 at 5:32 pm

    Does the regulator ever accept any blame for ANYTHING?

  14. The Cynical Broker 12th June 2014 at 8:15 pm

    Lenders don’t want to be innovative for fear of retrospective action by the regulator, end of story! You only have to look at MMR. The FCA says affordability not salary multiples is the way forward, and lenders fall into line, produce affordability calculations in line with what the FCA stipulate, yet less than two months into it, two major lenders bring in a 4 x multiple cap for loans over £500,000 and the Business Secretary calls for a blanket cap of 3.5x income.

    So hands up, who wants to be first over the top with innovation???

  15. The Cynical Broker 12th June 2014 at 8:16 pm

    p.s. Martin Wheatley, like Vince Cable is a brilliant example of the “Peter Principle!”

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