Andrew Bailey, the new CEO of the UK’s Financial Conduct Authority, gave what some might regard as an extraordinary speech at the FCA’s annual public meeting a few days ago. “Extraordinary” for 2 reasons. First, he recognised that, although the organisation is more than 3 years old, it still needs what he described as “a mission“. And second, because, in another attempt to put his predecessor’s “shoot first, and ask questions later” policy behind him, Bailey seemed to suggest that it was time to put “caveat emptor” back into the financial services sector’s armory.

Bailey used the first 3,200 words of his speech to cover old ground; and less than 600 words on the present and future – but that’s where the most interesting stuff seems to lie:

“Establishing and embedding a clear mission for the FCA is … critical to [its] success … the FCA has [statutory] objectives … but they are necessarily very high level … the FCA publishes an annual business plan which provides a map of the main work priorities for the year. But there is a larger piece missing in the middle … It is … not feasible for the FCA to be everywhere … at all times. It has to make choices … to make those choices it needs a clear mission, and this … has to tackle the big and hard questions … The FCA is required to take account of the general principle that consumers should take responsibility for their decisions. This sits alongside other important principles, including establishing a level of care for consumers appropriate to the product risk and consumer capability. How to balance the duty of care towards consumers, the duty of responsibility of consumers for their decisions, the role of firms and the role of the regulator, is an inherently difficult question to which there will be many potential answers. It lies at the heart of the FCA’s mission. So far, I would say it has not been adequately answered …

Work has begun [on] a proposal on the FCA’s mission which I hope we will … publish in the early autumn … I recognise that there will … be sharply contrasting views on these issues, but it seems to me that the success of the FCA depends on being able to establish its mission and thus a basis for public accountability …

The FCA has often been criticised for being too consumer friendly. One journalist argued that the FCA had tried to educate consumers (“if you want to keep warm, put your coat, hat and scarf on!“)and when that failed, it tried to stop the weather getting cold, to protect consumers from the consequences of their decisions. Another argued that consumers seemed to receive more safety information when they bought basic bank accounts and simple insurance policies, than when they bought chain saws and industrial pesticides. Clearly, each exaggerated for effect – but that doesn’t necessarily mean they were wrong. Here and elsewhere, Bailey also seems to suggest that the FCA has sometimes gone too far, and that it’s time to adjust the balance. If that is what he has in mind, #Brexit might help. Although some of the most often criticised consumer protection policies started life in Canary Wharf, some were conceived in Brussels, and could only be addressed or adjusted if the FCA’s hands were untied by releasing the UK from its obligations under relevant EU laws.