FCA boss and fintech enthusiast Andrew Bailey new BoE governor
Andrew Bailey will take over from Mark Carney who has steered the UK's monetary policy for nearly 10 years.
Bailey, who has spent a large amount of his career at the Bank of England, has since January 2016 steered the City regulator through a period of disruption. Not only with the ongoing Brexit uncertainty, but also with the rise of fintech and alternative finance firms.
He initially expressed some scepticism of the P2P lending sector, telling MPs in 2016 that he is “pretty worried” about certain aspects of the UK's P2P market. Bailey said peer-to-peer lending investments are at the asset management end of the investment spectrum, the opposite end to bank deposits. But believed that the platforms’ marketing efforts do not always reflect that positioning.
“I am pretty worried about some of the things that are said about these funds when they’re sold to people,” he said. “Some of the things that you read is that they get very near, but not quite there, to promising capital certainty,” he said at the time.
The recent 'crackdown' on P2P lending market reflects Bailey outgoing legacy within the industry which also saw the collapse of Lendy and, also, London Capital & Finance which saw Bailey jeered by its former customers in July.
Bailey has broadly been a cheerleader for innovation in the City, however. At the same meeting, he said: “Technology is an important part of this [tracking down wayward firms]. Innovation offers huge opportunities for consumer good . . . But it can also be an enabler of new forms of harm. We often see examples of this taking place today at the blurry edges of the regulatory boundary – where grey areas create opportunities for bad actors."
Last year he said that he believes disruptive finance will continue to grow and highlighted the regulator’s efforts to further globalise the UK’s lead in fintech.
“Fintech and ‘big data’ are transforming financial services. We will seek to maintain a regulatory environment where consumers and firms can maximise the opportunities of competition, innovation and Big Data while ensuring consumers don’t suffer harm as a consequence of those innovations,” he said.
“Particularly exciting over the coming months will be our work with fellow regulators on a blueprint of the global sandbox – in which innovative firms can test in multiple jurisdictions, minimising time to market,” he added.
Bailey, earlier this year following Facebook’s Libra launch, hinted at the need for greater regulatory scrutiny of Big Tech as it moves further into financial services via the FCA's latest 'perimeter report'.
It said: “Technology is dramatically changing the markets we regulate, and having a major impact on the perimeter. New challenges are created as financial services are increasingly delivered online and we have had to adapt... to keep pace.”
Later on, the report adds: “We know that technology companies entering the financial services sphere are likely to have a major impact on both firms and consumers in the UK, even if their activities fall outside the perimeter. We will keep this under constant review.”
It says that with large technology companies, such as social media platforms and online retailers, considering or already making inroads towards providing financial services in various ways there is a new front emerging.
“Some of these have never previously engaged in financial services activities. The market power of these companies could create a significant impact on financial services Consumers. This impact could be both from providing regulated activities, such as payment or banking services, and from other activities outside the regulatory perimeter,” it said.
“The boundary between providing mostly unregulated technical infrastructure to deliver financial services and providing regulated activities is increasingly narrowing. This also raises questions around whether financial regulators have the necessary tools and techniques to effectively oversee those organisations, ”