Inside the Financial Conduct Authority: The Life of a Regulator
From the 24th of June to the 30th of August, I spent 10 weeks on a summer internship working for the Financial Conduct Authority (FCA) – the conduct regulator of all UK-based financial services firms (and the prudential regulator for many of them, too). Compared to the fast-paced, high pressure environment of an investment bank, this may sound dry – but don’t be fooled. The work of the FCA is vital to the smooth functioning of the British economy, and is situated at the heart of the financial system. Yet what exactly does the regulator do, and what would life as a graduate be like there?
To many, the FCA is an unfamiliar organisation. Without a forward-facing consumer brand (unlike many of the bulge bracket banks), unless you work for a regulated firm or are an economics/business student, you’re unlikely to know much about it – perhaps other than the bizarre Arnold Schwarzenegger PPI ads that graced posters and televisions over the summer. However, it’s common knowledge that the modern financial system, left to its own devices, is inherently unstable. Misaligned incentives and host of other issues mean that it is consumers who suffer from the irresponsible actions of those in the financial services industry, and it is the FCA that is placed in the key position to protect them, and enhance the integrity of the overall financial system.
The work of the FCA can be split up into three main areas: Supervision, Enforcement and Market Oversight, and Strategy and Competition. Supervision carries out the majority of tasks people commonly associate with a regulator. They frequently visit firms, and ensure they abide by the FCA’s (very extensive) handbook. Civil or criminal charges may be brought to court if firms are found to be in violation of these rules. Supervision often gathers evidence for such cases, and passes this on to Enforcement, who deal with the litigation side of things (some cases even get taken to the Supreme Court). Market Oversight is slightly different, and can be seen as the “front line police” of the UK’s financial markets. For example, they decide who can trade on the LSE, monitor market disclosures, and deal with serious breaches – much of this involves real-time monitoring on Bloomberg terminals. Raids on firms suspected of illegal activity also form part of this area. Finally, Strategy and Competition is considered the “brains” of the organization, and is where a host of teams sit. For example, this is where the Competition and Economics department is, which provides specialist economic analysis to the whole organization, and also where the behavioural economics team is (Economics students should check out their analysis blog INSIGHTS at https://www.fca.org.uk/insight/). Other teams here include communications, policy, and the Innovate team (a new team that deals with regulatory issues surrounding FinTech).
For my internship, I was located within Strategy and Competition. For the first five weeks, I interned with the Parliamentary Affairs team, something that proved particularly exciting and dynamic given the political climate over the summer. We were primarily responsible for responding to MPs letters and monitoring Parliament. My role involved creating briefings for various figures in the FCA who were called upon as witnesses in Treasury Select Committee hearings, meaning I was able to go along to Parliament and attend such sessions. I also interned in a different communications team tasked with coordinated regional visits for some of the more high-profile figures in the organisation, in an attempt to reach out to vulnerable consumers and local communities.
The graduate programme itself is highly appealing. Not only is it the highest paying in the public sector (around ~£40,000 incl. benefits), but you go on a variety of rotations and an external secondment over the course of the two and a half years the programme lasts for. The secondment is particularly exciting, given some get to travel abroad and go work for international organisation such as the World Bank or regulators in other countries. (such as the SEC in Washington DC or the ASIC in Australia). I should note, however, that this is not a job most would (or should) choose for the money. Naturally, the private sector pays far higher, and I would emphasize anyone who chooses a job in the public sector (specifically with the FCA) to do it for the greater good (protection of vulnerable consumers).
Hopefully this article has given a bit more of an overview of the FCA, and in a different light than I’m sure many bankers would provide. Naturally, it is hard to fully depict the nature of the organisation, as they are involved in so many aspects of financial sector and consumer protection (including money laundering and financial crime), yet employees there are driven by desire to work in the public interest and improve the functioning of the British economy. I would recommend anyone who shares these values to apply to the organization too.