It is 3.30pm on a Saturday in late January. Baron Andrew Tyrie hasn’t downed tools for the weekend. He’s emailing the head of the Financial Conduct Authority to express his concerns about some upcoming regulations.
“I wouldn’t mind a brief word about them,” he politely writes.
By Sunday lunch, Nikhil Rathi had called him back.
Tyrie won’t divulge what was said. But the fact he has a weekend hotline to the UK’s top markets regulator tells you something about the influence he still holds over the City’s rulebook.
It has been a few years since Tyrie stepped back from his role as head of the influential Treasury Committee, where he forged a reputation as a fearless and somewhat truculent inquisitor of bank bosses and bureaucrats alike.
Internal ructions burst out into the open during his time as chair of the Competition and Markets Authority, hastening his eventual departure in 2020. (A former colleague says they can “definitely understand” where comments about his leadership style at the time came from.)
It may have been a few years since Tyrie chaired the Parliamentary Commission on Banking Standards — the government’s effort to mop up the mess left by the financial crisis and Libor scandal. But the 66-year-old’s passion for getting the right rules in place for financial services seems as strong as ever.
He continues to advise DLA Piper, one of the world’s largest law firms, and has co-authored a host of eye-catching papers as part of parliament’s Regulatory Reform Group from his seat in the House of Lords.
His drumbeat remains the same: regulators are failing the City.
“The board of the CMA was not receptive to constructive challenges… a problem not just of timidity at the top but remoteness from those whom it serves,” he tells Financial News. “Governance was of mixed quality, frankly inadequate in part.”
A CMA spokesperson said: “The CMA is under new leadership but old values like evidence-based decision-making, rigorous analysis and respect for the rule of law continue to underpin all of our work. This allows the CMA to take robust decisions and defend itself from legal challenge.”
Tyrie gives the impression little has changed since his time on the front line. Take audit regulation, for example: the Financial Reporting Council has been stuck in limbo for four years, as the City awaits its transition to the new, beefed up Audit, Reporting and Governance Authority. Those plans were delayed again earlier this month.
“Improvements to the FRC are at least 15 years overdue,” Tyrie says. “We can’t carry on as we are.”
An FRC spokesperson said: “Legislation is required to create Arga and we continue to work with the government on this as a matter of priority.”
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The government’s Financial Services and Markets Act pushed the FCA and Bank of England to boost the UK’s international competitiveness and economic growth. But Tyrie thinks it doesn’t go far enough .“The regulators have their own interests, like all organisations. One has to question whether granting more powers to a body that performs adequately on only half its existing statutory remit should be given yet more powers and duties.”
Tyrie lays much of the blame at the door of senior regulators. There is too much “groupthink” at the highest levels, he says. The Bank of England and Financial Services Authority were so “deep in their comfort zone” that they failed to see the financial crisis coming.
“Right at the top of many of these regulatory bodies, a group of like-minded people come together for mutual reassurance. They had convinced themselves all is well.”
He says this is “understandable”. “Unlike the private sector, where the pressure of the marketplace can be intense, in a public body frequent external challenge is the only remedy. They are providing substandard performance. But, like the financial regulators before the crash, they don’t always have enough self-awareness to notice.”
The Financial Services and Markets Act gives the government the power to ask regulators to review particular decisions if it thinks they are against the public interest. But the legislation stopped short of introducing a ‘call-in’ power under which the government could veto the FCA or Bank of England, or unilaterally make its own rules.
“Governments shouldn’t need a call-in power,” Tyrie says. “With good governance, these institutions should be capable of generating their own call-in at board level.”
The fight over the call-in power shows that relations between parliament and those responsible for policing financial services are going through a fractious period.
Tyrie is also wary that the FCA — which has taken on responsibility for everything from claims managers to funeral plans, consumer credit and crypto in recent years — and other bodies have too tough a task on their hands. “The FCA has been overburdened with responsibilities by parliament. It would be difficult, if not impossible, for any such regulator to be seen to have done a good job.”
“There will always be regulatory failure,” he adds. “The question for parliament and the public is: how much? And how receptive is the relevant regulator to doing something about it?”
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Tyrie is a true specialist. He rarely veers into broader political topics in our discussion on the future of the City. One exception is Brexit. “The UK’s relationship, economically and politically, with the EU remains vital to the UK’s prosperity and security,” he says. “The current settlement is probably unsustainable, but it is not yet acceptable in public discourse to admit it.”
But as politicians of all sides tip-toe onto an election footing, racing to outdo themselves with promises to turbocharge the UK’s economy, expect him to keep giving regulators a hard time on how they are delivering an agile framework that sets the country on the right path.
In the end, it is not all bad blood between Tyrie and our leading watchdogs. Tyrie sent Rathi a Happy New Year card in January. Whether he sends one next year very much depends.
CV
Born
January 1957
Education
1976-79
Bachelor of Arts in Philosophy, Politics and Economics, University of Oxford
Career
2018-2020
Chair of the Competition and Markets Authority
2010-2017
Chair of the Treasury Committee
2012-13
Chair of the Parliamentary Commission on Banking Standards
1997-2017
Member of Parliament for Chichester
To contact the author of this story with feedback or news, email Justin Cash
