Acting Chief Executive of the FCA, Tracey McDermott's speech at the Mansion House last night made a good case for appointing her to the role on a permanent basis by appealing to the sector with a warning about pendulum swings and the risk of getting "caught in a loop where we regulate, deregulate, repeat on an infinite cycle".
Regulation is becoming increasingly political. Against a backdrop of never-ending EU initiatives (and not unrelated calls for 'Brexit'), the Tory Treasury is flexing its muscle, perhaps most visibly in the treatment of McDermotts' predecessor. Few paid much attention to the Regulator's Code when it came into force in April last year but Sam's comments were prescient. Pension reforms, FAMR, the FCA's competition objective and concurrent work by the CMA – to name but a few initiatives - all point to a pendulum swing away from excessive regulation and a paternalistic concern for consumer protection (though some will see this as a return to a failed light touch approach to regulation that gave us the financial crisis, LIBOR and PPI mis-selling – to name but a few issues).
McDermott said: "I do not think I will get much argument in this room when I say that the intensity and volume of regulatory activity over recent years is not sustainable – for regulators or for the industry.
We are often told that boards are now spending the majority of their time on regulatory matters. This cannot be in anyone's interests. If that continues indefinitely we will crowd out the creativity, innovation and competition which should present the opportunities for growth in the future.
So while none of us would want to return to the problems of the past I suspect we will all be in violent agreement that we do not see the experience of recent years as the model for the future."
Trying for a rugby world cup-themed analogy, she described her vision of the regulators' future role as that of referee, policy-maker or groundsman and post-match commentator. Cynical statisticians might point her to Annex 2 of the FCA's current Business Plan for a full team sheet of EU initiatives that are warming up on the side lines ready to come on for team regulation. But the move to a more open style of play must be applauded.
In conclusion, she issued a rallying cry with which we can all agree: "we have a common interest in ensuring that the UK continues to have a world leading financial services industry known for its integrity and creativity. We need to make sure that we have a landscape that ensures clean markets and protects consumers through fostering competition and innovation. A sustainable approach to regulation, which breaks the regulate, deregulate, repeat cycle is critical to that."
There is something of a conflict in being a regulatory lawyer that believes in deregulation. I'd vote for Tracey.