Nikhil Rathi – APM opening remarks 2022

Note: this is the speech as drafted and may differ from the delivered version

I will set out a little of the context that we have been operating in and what we have done over the last year.

We continue to live through an exceptionally challenging external environment, bringing into sharp focus the important role played by an independent, assertive, and agile regulator.

We have been facing once-in-100-year events every few months recently.

We mobilised to support consumers, markets and businesses during the pandemic and it is fair to say we have not stopped since:

• Responding rapidly, working with domestic and international partners on the implementation of sanctions following the Russian invasion of Ukraine.
• Monitoring extreme movements in energy and commodities markets.
• And most recently, working with the Bank of England, the Pensions Regulator and other authorities to monitor the impact of the significant repricing of gilts, particularly on market functioning and defined benefit pension funds. 

This unprecedented level of repricing affects market levels of interest rates, used to price mortgages and consumer lending and therefore millions of consumers’ household budgets.

Such volatility demands vigilance.

Market participants can expect us to be talking to them regularly and requesting real-time data as we monitor events closely.

While we cannot change economic events, we can influence how financial services firms treat their customers when times get tough.

Richard touched on the new Consumer Duty[1], which not only protects consumers – particularly the most vulnerable – but could ultimately lead to fewer new rules for firms.

And yesterday we published enhanced guidance on the treatment of customers in relation to the provision of cash and branches.

Our broadening remit encompasses keeping an eye on tech giants and financial promotions, the rise of Buy Now Pay Later[2] and an increasing dependency on tech firms[3] for outsourcing the storage of customer data and housing key financial infrastructure.

Over the last year, we have worked to get better protection for consumers, enhance market integrity and to strengthen competition.

We have also frozen assets and levied fines to protect consumers and market integrity.

We have overhauled our listings[4] rules to make the UK a more attractive place to list firms and are engaging in an open discussion with market participants about further reforms.

Of course, we can always improve and must continue to do so.     

We are undergoing an extensive transformation[5] programme to do just that. Colleagues have worked tirelessly towards this.

One example is in the authorisations area, or what we call the gateway. 

We recognise that a gateway that is both rigorous and efficient is important for the competitiveness of UK financial services. We published an update[6] on our latest operating metrics earlier this week.

We recognise that authorisations of Approved Persons has been particularly challenging following the extension of the Senior Managers & Certification Regime in December 2019.

Following the recruitment of nearly 100 more case officers, the peak of 8,000 cases in July 2021 has now been reduced to 2,400 in September 2022.

Overall, our pending caseload is down by 47% and we will substantially be meeting our metrics by the end of the financial year.  

We have done this alongside implementing the recommendations of the Gloster Review with a more rigorous gateway.

And we are now looking to speed up our process through automation.

We have also helped more new firms to innovate and grow through our Regulatory Sandbox, an idea that has been replicated around the world.

We are being assertive with firms we don't directly supervise but whose cooperation is necessary to tackle serious consumer harm.

Buy Now, Pay Later firms and platforms like Google have changed their policies following our intervention.

We look forward to tech giants such as Meta moving more quickly to block scams on their platforms.

We know scams such as Authorised Push Payment fraud and money mule enticements are on the increase.

So, we have been holding hackathons and other collaborative events to devise solutions for these new challenges.

On crypto, we have recognised the potential of blockchain technology and rigorously applied new money-laundering standards. 

At the same time, we have continued to warn customers they must be prepared to lose all their money if they put their money into cryptoassets.

We have seen 600,000 people paying less interest because of our work on persistent credit card debt.

We have also made sure there have been changes to insurance pricing, where customers are no longer penalised for their loyalty.

Over £1.5 billion has now been paid in business interruption insurance claims following our case in the Supreme Court.

And banks and insurers can expect more contact from us over how they are treating customers who may begin to face challenges in the months ahead.

We are seeing banks and other lenders returning to the market[7] with mortgage products after their temporary withdrawal in previous weeks. 

Our extensive work on borrowers in financial difficulty[8] gives detailed guidance on what we expect of firms whether they are offering consumer credit, mortgages or overdrafts. 

This guidance places strong responsibilities on lenders to engage proactively with customers and provide tailored options for their situation.

From July, we also started regulating funeral plan companies[9] after having to crack down on rogue firms that took advantage of customers who were at their most vulnerable.

You can be assured that we will continue to strive to protect consumers from harm, ensure market integrity and foster innovation so our economy can grow even in the face of these expanding responsibilities.

Thank you for your time and as ever, for your forensically researched questions.