In his first major speech as Chairman of the FCA, John Griffith-Jones told attendees at TheCityUK’s London seminar on 13 June how he felt that both firms and the regulator could change, and the positive effect that would have on the market.

He first addressed his aims for the regulator, promising to focus on forward-looking, preventative regulation rather than trying to fix problems once they have arisen. He drew attention to the FCA’s policy risk and research division (PRR), which he referred to as the regulator’s radar for new threats. He listed new enforcement powers such as product bans which the FSA did not have, and highlighted some early FCA actions (publications on interest only mortgages and behavioural economics, thematic reviews, lowering barriers to entry for new banks, and a recent agreement with the banks on the retry system) as examples of the type of regulation firms may expect. However, he warned that early intervention may be unpopular, and may still fail to detect some problems before they arise.

Before moving on to areas in which firms must change, he acknowledged that he had avoided areas which may be covered by the recommendations of the Parliamentary Commission on Banking Standards (published today: Volume 1 Volume 2). He also noted the fact that most future regulatory change will come from Europe, but that the FCA was committed to involvement in the process.

The FCA’s aims for firms were simpler, and split into two complementary areas: cutting out bad behaviour, so that scandals such as LIBOR can be avoided, and promoting good behaviour. He hoped that through good management and practices at all levels of firms’ business, the principle of treating customers fairly will be reflected in every transaction.

The final part of the speech stated that the changes he had listed would lead to the promotion of greater trust between all market participants, which he felt was lacking at present. He hoped that this would lead to more efficient markets, as the interests of consumers and firms would be more closely aligned, leading to simpler regulation, more choice for customers who wanted it, and less need for vast amounts of small print which customers seldom read or fully understand. He concluded by saying that markets which work better will be more competitive, leading to benefits for all.