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Martin Wheatley: Judgement-based regulation is here to stay

FCA chief executive Martin Wheatley

Financial Conduct Authority chief executive Martin Wheatley has told the industry it should not be under any illusion that the FCA will stray from its judgement-based approach to regulation.

Speaking at the Association of British Insurers’ biennial conference in London today, Wheatley noted the expectation among the industry that the move away from principles-based “tick-box” regulation would be short-lived.

But he said the FCA represents a new era in financial regulation and that features such as thematic reviews and increased use of the regulator’s judgement are “here to stay”.

Wheatley said: “I know some people think this focus on business ethics is a regulatory ‘phase’. I have heard it described as a ‘cold breeze’ that will pass through. But I want to make it clear the first 100 days of the FCA are a bellwether of things to come. It is lasting change, as opposed to the firework that peters out and falls to earth. The financial sector needs to believe this change is permanent and prepare themselves now for the new regulatory world.”

He admitted the FSA needed “robust reform”, and he understands the industry scepticism over how much had actually changed.

Wheatley said looking back the previous approach to regulation, which assumed that consumers are rational and do not choose one adviser over another “because they are wearing a smarter tie”, was flawed.

He gave the example of the FCA’s review into interest-only mortgages as the type of preventative measures the regulator will take in future, saying its review was “a wake-up call for 600,000 borrowers who could have been sleepwalking into a problem”.


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There are 13 comments at the moment, we would love to hear your opinion too.

  1. Until the next Change of regulator, usually about an average 8 year shelf life before thay have deemed to have failed and need changing.

  2. Another self praising idiot without a clue. Guaranteed Knight Hood and huge salary at a bank when leaves. What is it with regulators and made up statistics, backed up with sensationalism.

  3. “Wheatley said looking back the previous approach to regulation, which assumed that consumers are rational and do not choose one adviser over another “because they are wearing a smarter tie”, was flawed.”

    There are some out there that might think this statement appears to call consumers thick?

    Also, this little bit of self praise about the FCA wake up call to consumers sleepwalking into an interest only mortgage problem. Who is he trying to kid? Would these be the same consumers who are putting hundreds a month away to fund for their future retirement? Probably not….!!!

  4. This guy is so full of waffle, I’m surprised nobody’s covered him in maple syrup and tried to sell bits of him from a trader’s cart outside Canary towers as snack breakfasts.

  5. Julian Stevens 9th July 2013 at 7:12 pm

    And what system of checks and balances will there be to raise any sort of (effective) challenges to the judgement of the regulator? What about when the regulator gets it wrong? To whom is the regulator accountable when those subject to its judgements consider themselves to have been dealt an injustice of judgement?

  6. Judgement based? The last financial crisis occurred because of poor judgement. RBS nearly went to the wall because of poor judgement. Barings did go to the wall because of poor judgement.
    It strikes me that there is an awful of poor judgement in the financial sector.
    So how is a judgement based regime guaranteed to be better than whatever went before.
    It strikes me the Mr Wheatley is a great man for glib sayings. Does little to suggest there is too much substance to create a viable regulatory regime.
    I suppose only time will tell. But it will be a nice pension, knighthood and membership of the Quango fraternity. How bad can that be.

  7. Yep! Another megalomaniac intent on fiddling while Rome burns!

  8. Judgement based regulation means that they have a nice get out clause should the s**t hit the fan again – which it will.

  9. Judgement based ? principle based ? or any other “based” regulation they care to think of ? here is a thought Martin what about, good old fashioned “common sense”, why ?, I ask you, does every thing you or your previous regulators have to be so in-flexible ?
    If you even bothered to try to understand the industry you regulate you might surprise yourself.

  10. Dear Mr Wheatley
    Judgement based regulation is “only here to stay” as long as there is anyone left to regulate.
    Have you not noticed that advisers are leaving in droves, having realised that jumping through all the regulatory hoops you prescribed, ended in an increase of a massive 16% rise in fees?
    There is no longer anything left in FS to attract people. The regulator is hell bent on assuring the public they will be dealing with a bunch of shysters if they try and obtain financial advice (just look at the front page of their website)
    Graduates are shunning financial services. Teach First has overtaken traditional big recruiters in banking, finance and the civil service.
    No one wants to be treated the way the FCA treat advisers, the solution being get out or do not join. Keep it up Wheatley and with any luck you will regulate yourself and your gang of henchmen out of a job.

  11. Can someone tell our compliance provider that the tick-box regulation will be no more!!!!

  12. Er not so Mr Wheatley.
    The figures (out today) you are awarding yourselves will soon mean Financial services is no longer a viable business. Paying out more than you are able to take in is not really a cost effective business model.
    No more firms, no more regulation, judgement based or otherwise, necessary.

  13. Judgement based regulation eh? Here is a novel question. What about fact-based regulation? would that not be a good start?

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