Andrew Bailey's appointment as CEO of the U.K.'s Financial Conduct Authority fills a big hole. His departure from the top spot at the Prudential Regulation Authority leaves an altogether bigger one.
The FCA aims to ensure markets function properly and that there's competition and integrity in financial services. Its previous CEO, Martin Wheatley, was dumped last year by Chancellor of the Exchequer George Osborne. The regulator's missteps, and shoot-first-and-ask-questions-later approach had only antagonized the firms the FCA oversees.
In the wake of Wheatley's exit, critics have questioned whether the FCA was unduly pressured by government to drop a review of bank culture in December. The appointment of Bailey, a career man from the Bank of England, could exacerbate concerns that the FCA lacks independence from Westminster.
The inbox he will inherit at the FCA when he lands in July won't be brimming over. The FCA's major investigations of recent years -- from the manipulation of Libor and foreign exchange benchmarks to the mis-selling of payment protection insurance -- are all winding down. The decision to call time on the probe into bank culture also removes what would have been a big drain on the FCA's resources.
Fresh conduct issues could still rear up at any moment. And raising morale at the beleaguered FCA will be a slog too.
But Bailey has arguably left the more difficult and important challenges behind.
The PRA is the unit of the Bank of England tasked with promoting the safety of the financial system. Bailey successfully built it up out of the ashes of the discredited Financial Services Authority.
His replacement at the PRA will take over just as it implements a stack of new regulations. These include rules that aim to address concerns about pay, force banks to put firewalls around their consumer banking operations, ensure stability in the insurance industry, and tighten up regulation of alternative investment funds.
If you think a review of banking culture sounds difficult, try Solvency II, CRD IV, AiFMD. The new PRA chief's agenda will shape how almost all U.K.'s financial firms are capitalized, how they are structured and even where they are located. Bailey is leaving before that job is completed.
George Osborne said the government "cast the net far and wide" in the search for a new FCA chief, though Bailey was always the best candidate.
With only five months before Bailey leaves the PRA, Osborne will need to ready his net once again.
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