The incoming Chief of the Financial Conduct Authority revealed his plans to shake up diversity and culture across financial institutes, "leading the way" on its commitments under the Women in Finance Charter.
Addressing his first Treasury committee session on behalf of the City watchdog Nikhil Rathi warned that there were "deep" diversity issues in the financial services industry and admitted there would likely be "challenges" at the FCA too. He said, "There are issues in the talent pipeline through the organisation and how it is attracted and developed.
"There will be issues to be discussed around unconscious bias and I think the Black Lives Matter movement has touched a nerve in many organisations where colleagues are beginning to speak up much more openly about these issues."
Previously Rathi served as the director of the financial services group at the Treasury where he led international legislative negotiations in the EU. Before that he was head of the financial stability unit during the 2008 financial crisis and served as private secretary to Tony Blair and Gordon Brown during their time as prime ministers between 2005 and 2008.
His recent appointment comes in the wake of a shattered economy due to Covid-19. Rathi is slated to begin work from October after completing his stint at the London Stock Exchange. According to him, exiting the Covid-19 crisis would be a challenge for the FCA whereby, vulnerable consumers are treated properly and that competition is not eroded as some financial firms go bust. He said, "The FCA is a national institution and it is incredibly important that the FCA reaches out to all the regions and nations of the United Kingdom.
"I think there is an opportunity now to think creatively about how resources for the FCA and talent can come from many more parts of the UK than historically."
But his appointment also begins at a crucial time when Britain will no longer have to comply with European Union rules after December after transition arrangements that followed Brexit in January end. This entails that some of Britain’s financial services rules could be eased to bolster the City of London. But future direct access to the EU financial market will depend on Britain’s rules remaining in alignment with those in the bloc.
Rathi believes that there needed to be strong cooperation between the FCA and its EU counterparts to build up trust and avoid questions about the motivation behind any adjustments in UK rules that could jeopardise EU access. He said, “It will be important for the UK to have a good degree of freedom to develop rules, not just in terms of content, but the pace at which changes are made.”
