Finance

Staff churn, mounting workload, and crypto incapacity: Here’s what’s challenging the FCA

In an otherwise quiet late August, the UK’s markets watchdog has dominated the news agenda.

Amid a challenging year in which the Financial Conduct Authority’s employees have been navigating compliance headaches arising from both the coronavirus crisis and Brexit, Financial News reported the regulator had been criticised for not giving more thought to unintended consequences arising in other areas of its policy-making.

FCA backtracks draft rules forcing funds to monitor advice quality after asset managers object

The FCA’s regulator-in-chief Nikhil Rathi is striving to make his mark on the organisation he joined 10 months ago.

Under the leadership of Rathi since October 2020, the FCA has been grappling with mounting workloads as Brexit gives more powers to UK regulators. It is also tasked with getting back on track initiatives derailed by the Covid-19 pandemic, all while undergoing significant structural change as part of Rathi’s ambitious “transformation programme” for the watchdog.

It’s an environment that has prompted some of the regulator’s workforce to begin to voice concern about job security and the changes ahead.

FCA staff back Nikhil Rathi in latest staff survey but some feel negatively about changes

Others, meanwhile, have been voting with their feet.

In his first business plan, announced on 15 July, Rathi said that bolstering the FCA’s regional headcount across the UK would form part of the regulator’s priorities for the year ahead. A key element of that plan was an FCA vow to grow its Scotland workforce to more than 200 by 2023 — its second such pledge in as many years. But, as FN reported on 25 August, staff turnover in the Scottish outpost increased ahead of the watchdog’s latest commitment.

Staff churn doubles as Scottish FCA ahead of pledge to boost hiring

The FCA also committed to spending £11m on a digital marketing campaign to warn investors over the risks of putting their money into cryptocurrency in its July business plans.

Rathi said then that the FCA remained concerned over how many investors — particularly those falling into younger and ethnic minority demographics — were ploughing savings into asset classes that could potentially leave them penniless.

But on 25 August, the FCA issued a statement saying the world’s largest crypto exchange was “not capable of being effectively supervised” by the watchdog, after it “refused” to respond to several queries about the business.

Binance ‘refusal’ to cooperate leaves FCA unable to scrutinise crypto firm

As doubts swirl over whether the regulator is organising its staff in the right way and doing enough to hold on to top talent, experts are questioning whether the Financial Conduct Authority can keep up with its mounting workload.

It’s a view that is starting to get more and more sympathy from the compliance world as the FCA’s tendrils have spread further and further into new markets.

Mounting workloads and staff struggles: Can the FCA keep up?

Tough decisions lie ahead for the UK’s financial services watchdog as it continues to juggle its competing priorities.

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

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