Should the bookies pay out on Andrew Bailey now?
The favourite to replace Mark Carney as the next Bank of England governor sailed through a major test yesterday as Bailey weathered a two and a half hour grilling by MPs.
Bailey, currently the CEO of the Financial Conduct Authority (FCA), appeared before the Treasury Select Committee in Parliament on Tuesday to answer questions alongside FCA chair Charles Randell.
There were plenty of opportunities to trip up. MPs questioned the pair on: the recent suspension of the Woodford Equity Income Fund, which has left over £3bn of investor money frozen; the collapse of London Capital Finance at the start of the year, which left thousands of investors out of pocket; and the scandal of mistreatment of small businesses by Royal Bank of Scotland’s crisis-era turnaround unit.
In all three cases, the Financial Conduct Authority has been accused of being asleep at the wheel.
However, Bailey gave an assured performance. He was in command of the details and reassured the committee that he was taking action.
“I do take personal responsibility,” Bailey told MPs. “I don’t pass the buck on this. We are taking cases that have never been taken before. They are very complicated cases, they do take time.”
Bailey and Randell made a convincing case that the series of scandals where a failure of rules, not of the regulator.
Bailey argued for a move towards principles-based rules to escape the kind of box ticking culture that had led to the Woodford suspension. The fund manager had done everything above board but had “sailed close to the wind” when following the rules, Bailey said.
MPs seemed convinced. They were so charmed by the performance that Treasury Select Committee chair Nicky Morgan joked at the end of the session that Bailey may be in a different job next time FCA representatives are called before the committee. Bailey, smiling wryly, said he couldn’t comment.
Bailey is the bookies favourite to return to the Bank of England as governor when Mark Carney leaves in January 2020. Bailey left the Bank of England, where he was deputy governor, in 2016 to come and run the FCA. Tuesday’s performance — widely seen as a trial run for the top job — makes a return to the Bank even more likely.
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.