Finance

City execs fear ‘captain deserting sinking ship’ after FCA chair’s shock resignation

The resignation of Financial Conduct Authority chair Charles Randell came as a shock to regulatory specialists in the City, who voiced concern about upheaval at the UK watchdog.

Randell, who was expected to stay in post until 2023, is now set to leave next year and said in a 15 October letter to Chancellor Rishi Sunak that it’s “the right time for a new chair”.

His departure is awkwardly timed. FCA chief executive Nikhil Rathi is barely a year in the job, and is already grappling with fallout from scandals, a morale crisis and mounting workloads for staff hobbled by Brexit headaches. As part of Rathi’s transformation plan, the FCA is also tasked with restarting initiatives derailed by the pandemic while the agency undergoes structural and top management changes.

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The move also comes after Financial News reported of leaked internal chats where FCA staff blasted their bosses for decimating morale in a discussion on the watchdog’s plans to scrap bonuses.

“I just hope it’s not a case of the captain deserting a sinking ship,” said Nick Bayley, a former head of department in the FCA’s markets policy and international division who is now managing director for financial services compliance and regulation at consultancy Kroll. “It’s in no-one’s interest to have a regulator in turmoil.”

The FCA declined to comment.

Randell’s resignation is “a significant loss” amid “a period of exceptional operational challenge” at the markets watchdog, said Paul Sharma, the co-head of UK regulatory advisory services at consultancy Alvarez & Marsal and former deputy head of the Bank of England’s Prudential Regulatory Authority, who worked alongside Randell when he was a non-executive board member for the PRA.

“The FCA is not perfect, as recent scandals illustrate, and it does need to reform, but Charles has been instrumental in recognising that need for reform and in working to achieve change,” Liz Field, chief executive of the Personal Investment Management & Financial Advice Association, said in an emailed note.

READ Leaked FCA memo shows bosses seek to quell staff outcry as morale slumps to ‘all-time low’

Randell faced calls for his resignation following a series of retail investment scandals.

Gina Miller and Alan Miller, founders of wealth firm SCM Private, and also among the City’s fiercest critics of the UK regulator, called for Randell to step down in April over victim compensation related to scandals such as London Capital & Finance.

An FCA spokesperson said at the time that it had “consulted on the changes” to its complaints scheme and would respond to the Millers regarding their concerns.

Randell spent the five years prior to joining the FCA as a non-executive board member at the PRA arm of the central bank, but he is best-known for his work with the UK Treasury on a range of financial crisis-related assignments.

Randell advised ministers on the nationalisation of failed bank Northern Rock, the part-nationalisation and sell-off of UK lender Bradford & Bingley, as well as on the Icelandic banking crisis. He was also central to the recapitalisation of the UK banking sector, working with the government on its £20bn investment in shares in the Royal Bank of Scotland and £17bn acquisition of shares in the merged Lloyds/HBOS.

READ  FCA staff take steps to form union amid bonus cuts and ‘demoralised’ workforce

His work generated £32.9m in fees for Slaughter and May from the Treasury department in two and a half years, according to a 2009 report from The Telegraph, which cited a bill relating to the City law firm’s work from September 2007 and estimated forward projections to March 2010. And the Oxford University-educated son of a civil servant was handed a Commander of the British Empire award in 2015 for his services to financial stability.

Jonathan Herbst, a partner at law firm Norton Rose Fulbright, said Randell “will be a hard act to follow”. “The sense in the industry has been that he has been an engaged and experienced chair,” he said. “It will be interesting to see who is appointed and this will be a good indicator of the direction of regulatory travel.”

Mel Stride, a Conservative politician and chair of the UK parliament’s influential Treasury Committee, said Randell “has helped to steer the FCA through a challenging period” and that the committee “will follow closely the process for the appointment of Charles’s successor” which the Treasury department said it would begin today.

Randell’s letter to Treasury said it “had been a privilege to chair the FCA” during “this extraordinary and challenging period”.

“Although this transformation is well under way, it will not be complete by the end of my term,” he said. “As our newly established executive team begin to roll out their strategies next year to complete the transformation of the FCA, it is the right time to hand over the oversight of the rest of the transformation programme to a chair who can see it through to completion.”

To contact the author of this story with feedback or news, email Lucy McNulty

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