The UK’s City minister has lashed out at the Financial Conduct Authority’s “name-and-shame” proposals and its tough approach to regulating digital assets — saying the regulator’s priorities are massively out of step with the banking industry.
The signal to international investors and people in this country is that the regulator still doesn’t get it,” said Bim Afolami, speaking at the Crypto and Digital Assets Summit by the Financial Times and The Banker on May 8. “The regulators need to … stop doing things like that.”
Afolami’s public remarks on the FCA’s plans to name and shame financial institutions under investigation are the strongest yet made by a government minister, according to The Banker’s sister publication Banking Risk and Regulation, which reported the comments.
The proposals have already sparked major criticism. In a rare intervention in April, chancellor Jeremy Hunt called on the conduct regulator to reconsider its proposals, arguing that they detracted from the regulator’s duty to stimulate growth.
Afolami said that he “completely agree[s]” with Hunt’s comments, saying the naming proposals and the FCA’s diversity consultation, which could see executives’ private lives probed by their employers for evidence of bullying, as objectives the regulator should stop focusing on.
He told the London summit: “When they say they don’t have resources sometimes to deal with certain things, I say, well, stop focusing on things that are non-core — like naming and shaming or this diversity consultation.”
Asked by his interviewer whether Hunt’s comments would politicise a supposedly independent regulator, Afolami said regulators did not share the same status as the judiciary. “Ultimately, regulators are only there by acts of Parliament or acts of government.”
“Regulators operate under the umbrella that Parliament sets them. And it is perfectly legitimate for the chancellor or indeed anybody else to say: ‘We think in this instance, we’d like you to think again’. I think that is perfectly legitimate.”
Afolami stopped short of suggesting a change of leadership at the FCA, but heavily criticised previous FCA chair Charles Randell’s approach to digital assets as “patronising” and “arrogant”.
“This is a very polite gathering. So I want to be as polite as I can when I say I think he’s completely wrong,” Afolami said.
Former FCA boss’s views ‘arrogant’ and ‘patronising’
Randell last year attacked the government for its plans to regulate crypto assets, saying it was likely to lead to more consumer harm. He called fraud “a feature not a bug” of the crypto industry.
“I think that’s very patronising,” Afolami said. “That is really arrogant to think that somehow ordinary people aren’t able to make judgments about their own money,” he added, pointing to ongoing fraud in the traditional financial services sector.
The UK government’s job is to “give as many opportunities for ordinary people to have a stake … in the economy as possible. Crypto is a key part of that.”
Britain is open for business, he also insisted. “We’ve moved as fast as we can while setting up a sensible regulatory framework. Being pro-innovation in crypto is not saying no regulation at all. It’s about providing a sensible regulatory regime.”
“We have got to get out of the mindset that says … high standards are always better. They’re not inherently better if you’re setting an unnecessarily complicated system where nobody can make any money.”
This article first appeared in Banking Risk & Regulation, a sister publication of The Banker
