Chris Woolard was interim chief executive of the Financial Conduct Authority when the Covid-19 pandemic hit, a time he describes as both a privilege and “incredibly challenging“ because of the imperative to act with speed, and subsequently to transition from the immediate response to focus on longer-term impacts and the future resilience of the sector.
The regulator’s response during the early stages of the pandemic was swift, with a rapid shift of focus to issues such as business interruption insurance and mortgages, showing a commitment to “take any steps necessary to ensure customers were protected and markets continued to function well”, says Chris. These steps included delaying and deferring regulatory change; taking a business interruption test case to the Supreme Court on behalf of policyholders seeking to claim for Covid-19 related business losses; and providing significant support to five million mortgage holders and consumers struggling to repay credit. The business interruption insurance test case was the first of its kind undertaken by the FCA and unlocked payments of £1.2bn to small business policyholders. All this was “as well as the challenges of leading a large organisation through what was a very difficult time,” he recalls.
Innovative products and services need to be balanced with preserving the duty of care towards consumers But his time at the helm was “rewarding as well, in the sense that a number of people outside the FCA said that they suddenly felt that regulation, the public sector in general, and the FCA in particular, all found their feet during the pandemic at incredible pace, and inside the organisation there was a strong sense of high morale and purpose”. This can be attributed to the degree to which financial services, government and regulators broadly read the public mood, coming together to offer staunch and committed support to business – a marked contrast to how the sector’s response was perceived by many after the global financial crisis of 2008.
Ongoing challengesIn April 2021 Chris joined EY as a partner, responsible for its Europe, Middle East and Africa financial services regulatory capabilities and chair of its global financial services regulatory network. Chris brings his experience, which includes eight years as head of strategy, competition and innovation at the FCA, to bear on a plethora of issues and challenges impacting the sector.
From ongoing global regulatory challenges posed by the effects of Covid-19, to rapidly changing technology and the drive to act with greater environmental and social purpose, Chris describes his agenda at EY as being “huge” and suggests that firms’ agility will be crucial amidst the headwinds currently facing financial services firms.
Prior to the FCA, Chris spent ten years working as a senior civil servant at the Department of Trade and Industry, and senior roles with bodies including the BBC and Ofcom (see CV boxout).
The road ahead
Taking a closer look at the challenges, Chris says that he’s anticipating “regulation shifting to cope with the pressures of the immediate Covid-19 crisis and its aftermath,” with the pace of technology change for both consumers and businesses becoming “increasingly mainstream”. The ESG commitments of firms are likely to become increasingly embedded in regulation, he says, with stress tests and disclosures the tools that will be most commonly used to measure performance.
Access to, and protection of, consumer data also continues to represent a key issue in financial services, and Chris sees the FCA’s proposed new Consumer Duty, which will require UK firms to more actively assess and evidence that they act to deliver good outcomes for customers, as a landmark proposal. “I think the Consumer Duty will become a model for regulators to think about globally,” he says.
“Many large firms are thinking about how they can better use data and technology to get commercial insights about their customers, but regulators are now expecting firms to apply a different lens to the same data for the purposes of customer protection. A core question is how far these different objectives are integrated rather than handled as separate processes.”
Chris Woolard’s CVApr 2021 – present Partner, EY;
Chair of EY’s global regulatory network and financial services regulatory practice lead for EMEIA and the UK
Apr 2021 – present Board trustee, Which?
2021 Appointed CBE for services to financial regulation and financial technology innovation
2020–2021 Chair, review into change and innovation in the unsecured credit market (The Woolard review), FCA
Mar–Oct 2020 Interim chief executive officer, FCA
2013–2020 Executive director strategy and competition, FCA (and Board member from 2015)
Mar–Oct 2020
Member, Prudential Regulation Committee & Financial Policy Committee, Bank of England;
member of the IOSCO Board; member of the FSB Strategic Risk Committee
2014–2020 Non-executive director, Payment Systems Regulator
2009–2012 Group director, content, international and regulatory development, Ofcom
2005–2009 Deputy director, BBC Trust, BBC
1995–2005 Senior civil servant, Department of Trade and Industry
The swinging pendulum
More regulation might be the answer for greater consumer protection, but when it comes to the wholesale market, Chris identifies the pendulum swinging more towards, “if not massive deregulation, then certainly trying to make regulation more coherent and more sensible”.
This is in response to growing concerns over the efficiency of the UK wholesale market and how it compares operationally in terms of international competitiveness, he says. “The question is how you drive more investment towards the real economy.” He refers to significant changes proposed in the March 2021 UK listing review, chaired by Lord Hill (the Hill Review), which finds “examples of over-complexity, duplication, overly long timescales and unnecessary and burdensome requirements,“ in the current listing regime, along with “signs that the lack of flexibility in the premium listed segment in particular is playing a part in driving business to our competitors“. The Hill Review recommendations aim to combine “high standards of regulation and governance with flexibility and nimbleness“ to ensure the UK’s capital equity markets remain dynamic and competitive.
Alongside the Hill Review, he points to the government’s ongoing Wholesale markets review, which aims to deliver a competitive framework that, amongst other recommendations, removes barriers to trading and unneccesary burdens on firms.
A friend of fintech
In keeping with Chris’s experience in government and NGOs, he views the rise of fintechs in terms of how they can deliver value and quality for the end user.
But the enormous potential for innovative products and services needs to be balanced with preserving the duty of care towards consumers, he says. “We’ve seen that AI and data can be used to tailor, personalise and improve the kinds of experiences that we all have as consumers of financial services. They can ensure you are connected to the right products, and they enable you to bank and carry out transactions at your convenience rather than at the convenience of the bank.”
Chris points to the need for “escape lanes” – opportunities for customers to exit an automated process and speak to an adviser where it is appropriate or desired (see our article on fintech and vulnerability for examples of how to do this).
As the UK feels the economic effects of the pandemic, there has been increased regulatory focus on the FCA’s new Consumer Duty and the protection of customers in vulnerable circumstances, which the CISI examines in depth in a recent special report. For regulators, says Chris, “the question now is: how do you really ask firms to put themselves in consumers’ shoes? How do you think about so-called sludge practices: those things that we often encounter on a daily basis that stop markets working well and stop consumers getting the best deal sometimes?”
Much of this momentum towards improved consumer protection is being driven by technology, and Chris sees real opportunity in the growing ability of firms to use data to create a more joined-up view of the customer, but warns that the regulator will be expecting this to be “thought about from a compliance perspective and a consumer protection perspective as well”.
The role of regtech
In an episode of EY’s 'Fintech beyond borders' podcast from October 2021, Chris comments on regtech and its potential implications for regulators in the future. He notes that the drivers of successful regtech platforms use technology to perform functions that would be difficult or impossible to do manually, finding “new solutions to old problems”. An example could be to include assimilating information about individuals in financial crime, he says.
He acknowledges that when it comes to the role of the regulator in building a regtech ecosystem, “ultimately they aren’t the innovators, but they can create the environment in which innovation can occur”, such as by identifying global interconnected problems and working across borders to address these. As regtech becomes mainstream, regulators can set expectations around best practice, and “have it within their gift” to ensure that standards are applied across whole markets.
“I think there will always be a human component to the most delicate pieces of banking,” Chris says, adding that a technological interface isn’t convenient for everyone. “They are always going to need that human touch as well.”
The Woolard review
In September 2020, when the pandemic disruption had stabilised to an extent, Chris was asked to head up a review of the unsecured credit market, which was subsequently published in February 2021. Key issues highlighted in The Woolard review include a need for buy-now-pay-later (BNPL) products to be brought within the regulatory framework, an outcomes-focused approach to regulating the credit sector, a well-functioning free debt advice sector, and more alternatives to high-cost credit.
Despite the criticism towards deferred payment credit schemes, Chris recognised the need for products that offer people a solution to small amounts of credit, and the review’s recommendations regarding BNPL and high-cost credit were subsequently included in the FCA‘s Business Plan 2021–22.
Of note, The Woolard review and its findings were welcomed by the debt charity StepChange, which commented that it was “extremely pleased to see the breadth and scope of issues that the Woolard review report is encouraging the FCA to progress”.
New beginnings
Now nearly one year into his new role, Chris says that a highlight of his tenure so far has been EY’s support of Natalie Ceeney CBE, chair of Innovate Finance, and major banks and building societies in finding “a really practical answer to ensuring customers have access to cash for the foreseeable future”.
He notes that many of the challenges facing his new clients – whether governments, regulators or financial services firms – feel quite familiar. Chris cites how firms can “address the challenges of thinking about their wider commercial strategy and about how technology is changing along with both the threats and the opportunities that might be there”.
He remains focused on regulation. As the chair of EY’s Global Regulatory Network, Chris works with his colleagues worldwide to help firms in the financial sector respond to fluctuating financial and non-financial, operational and governance requirements.
He sees the overarching direction of travel continuing towards building a more considerate and consumer-focused financial services sector. “Consumer protection is essential for most G20 economies in terms of how they think about growing financial services”, he says.
He believes it will take a little while longer for the true scale of the economic consequences of the pandemic to emerge and to be effectively quantified. “There is no reason to think the UK market will be anything other than busy from a regulatory perspective for the foreseeable future. The Consumer Duty is probably the biggest change in retail regulation in a decade, and will drive some really positive thinking about outcomes that I hope we can help make a reality.“