Martin Wheatley

FCA Chief Executive Speaks at ISDA Conference on Reform of the International Derivatives Market

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The FCA has published a speech made at a conference held by ISDA in London by the Chief Executive of the FCA, Martin Wheatley, on reform of the international derivatives market.

The speech focused on the “final delivery stage” of reforms in this area.  Martin Wheatley commented that the details on which regulators are currently focusing “happen to be some of the most important facing the derivatives industry.”

The key issues under consideration were the extent to which financial regulators exert influence across international markets, the issue of the broader recognition of equivalence between international regimes, the collateralization of bilateral derivatives, EMIR implementation and benchmarking.  Speech.

FCA Publishes Occasional Papers on Behavioural Economics Exploring How People Make Financial Decisions

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In his first speech as CEO of the FCA, Martin Wheatley vowed to crack down on unsuitable financial products by using elements of behavioural economics to better understand investor decisions.

The FCA is interested in behavioural economics to help the regulator understand the mistakes consumers make, how firms respond to these mistakes, how this affects competition and what interventions the FCA might consider.  The FCA published a research paper on how it intends to implement behavioural economics in its work.

FSA Publishes a Guidance Consultation on the Risks to Customers from Financial Incentives

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On 5 September 2012, the FSA published a guidance consultation on the risks to customers from financial incentives (GC 12/11). 

GC 12/11 includes proposed guidance for firms on:

  •  incentive scheme features that increase the risk of mis-selling; and
  • managing the risks and governance of incentive schemes.

The publication of GC 12/11 marks the launch of what the FSA is calling its initiative to outlaw flawed sales bonuses that encourage mis-selling and was accompanied by the publication of a speech by Martin Wheatley (Managing Director, FSA and chief executive officer designate, FCA) entitled ‘The incentivisation of sales staff – are consumers getting a fair deal?’.  In his speech Mr. Wheatley explained that the FSA’s initiative – in which he would be taking a lead role – was aimed at ensuring that financial institutions view their customers as people to be served, as opposed to people “to sell to”.

 The FSA invites firms to respond to GC 12/11 by 31 October 2012.

Terms of Reference for Wheatley Review of LIBOR Published

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On July 30, HM Treasury published a press release setting out the terms of reference for the independent review of LIBOR to be carried out by Martin Wheatley, Chief Executive-designate of the Financial Conduct Authority. Press Release.

Issues to be considered are:

  • Whether participation in the setting of LIBOR should be a regulated activity.
  • The construction of LIBOR, including the feasibility of using actual trade data to set the benchmark.
  • The appropriate governance structure for LIBOR.
  • The potential for alternative rate-setting processes.
  • The financial stability consequences of a move to a new regime and how a transition could be appropriately managed.
  • The adequacy and scope of sanctions for tackling LIBOR abuse. In particular, it will cover the scope of the UK authorities’ civil and criminal sanctioning powers with respect to financial misconduct, particularly market abuse and abuse relating to the setting of LIBOR and equivalent rate-setting processes, as well as the FSA’s approved persons regime and investigations into market misconduct.

There will be a four-week public consultation starting on August 10 with Mr. Wheatley aiming to publish his conclusions and recommendations by the end of September. The UK government intends to implement the findings of the review in the Financial Services Bill 2012-13.

Speech by Tracey McDermott on FCA’s Approach to Enforcement

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On July 2, the FSA published a speech by Tracey McDermott, acting director of the FSA’s Enforcement and Financial Crime Division. The speech focused on credible deterrence and the approach that the Financial Conduct Authority (FCA) will take to enforcement. Speech.

Ms. McDermott commented on the FCA that:

  • thematic and firm-specific supervisors will work in a more integrated way;
  • the focus will increasingly be on senior management who fail to recognise and manage risks and fail to control the way products are sold; and
  • it will have a low tolerance for repeat offenders.

The FSA also published a speech by Martin Wheatley, chief executive designate of the FCA. His speech emphasised that the FCA will continue the FSA’s policy of credible deterrence. Speech.