People, perspective and priorities: the Regulatory Pillars

Interview with Richard Lloyd Deputy Chair of the Financial Conduct Authority, Chair IPSA and Non-Exec ASA

Richard Lloyd brings a wealth of consumer interest experience and a deep understanding of policy making and government function to his non-executive portfolio. A long-term champion of the consumer, Richard recognises and encourages the views of the widest collective, be it on the board, a focus group or wider customer base. This needs to be balanced with managing priority and utilising technology where possible. We thoroughly enjoyed talking to Richard and his candour and passion shone through.


How would you say the position of financial services has changed since you joined the board of the FCA?

In the four years I have been at the FCA the most striking development is the speed of change in financial services. This has sped up the range of products available, particularly digitally, but it has also seen the withdrawal of more traditional services – bank branch closures being the more controversial ones.

This in turn has broadened our remit. We very much support safe innovation, and one of the key initiatives is the FCA’s regulatory sandbox where firms that have a new product or service can come and test it out.

All regulators have got to prioritise in a fast-changing world and be ready to deal with the unexpected. For example, with the awful war in Ukraine the FCA was suddenly central to sanctions enforcement.

Financial services is never far from intense political interest. With the passing of the Financial Services and Markets Act we have also been tasked by Parliament – as a secondary objective – with supporting international competitiveness and growth. So, a lot of external change is always coming at us fast.

It requires very clear strategic thinking about priorities. It requires our organisation to think long term and base what we do on the best possible evidence.

We can’t do everything and right now we have to focus on our core purpose of keeping the system stable and consumers protected during tough economic times.

It is challenging, but never boring. Politicians and the media are very vocal about the relatively small number of things that do go wrong. But day-to-day, we’ve got a safe and sound financial system that’s able to withstand huge global pressures. That’s a result of intensive unseen work behind the scenes and we shouldn’t forget that.


What benefits will the upcoming Consumer Duty regulation from the FCA bring to the sector and consumers alike?

It’s been a really big moment of resetting for the industry because it brings in new, higher standards for all of retail finance – from the biggest banks to the smallest financial advisors. We want them to demonstrate that they are putting their customers’ first, avoiding harm, and ensuring fair value in the products and services that they’re buying.

It has required regulated firms to step up. Many businesses are really well prepared but some are less so. We have been open about how we will enforce the new Duty but in the end this should promote trust in the industry and reduce the need for lots of very detailed rules while raising standards across the board. It’s ambitious, but needed.


Has fintech empowered or confused the consumer?

Banking and other financial services are being transformed by fintech, but moving to a more digitally-based financial services environment brings risks. The huge growth in fraud and financial scams is particularly challenging, as well as the risk of people who aren’t online being excluded. We have got to ensure that we don’t leave people behind, but the potential benefits are enormous, and we need to balance safeguards with enabling digital innovation, the better use of technology and of data.

We’re not dealing with this alone, it’s a global industry with global challenges, for example in regulating so-called crypto assets. I’m proud that the FCA is leading the way.


The financial services sector faces many pressures with turbulent markets, the rise of crypto, the cost-of-living crisis and a rise in financial crime – how does the regulator prioritise?

We have to prioritise, as always, based on the risk of harm. We’ve had to adjust with the cost-of-living crisis, which has worsened personal debt and hit peoples’ ability to afford mortgages and other borrowing. When we could see that coming, we moved to make sure that the banks and other players involved are treating their customers fairly and appropriately when they are struggling or wanting to save.

There are problems that always get worse during difficult economic times and financial crime is definitely one of those, the promotion of risky investments being another. We are continuously looking at how resilient different bits of the industry are in the current circumstances; how consumers are coping with the pressures on them; and whether the new products and services that are coming their way are heightening those risks.

Part of my role as a board member is to make sure that we are constantly scanning the horizon and making sure that we are as best prepared as we can be for what’s coming. And, if necessary, we de-prioritise things that we might have liked to have done but no longer have the capacity to do well.


What sort of time commitment do you have to give to a role like this?

It is busy. When I was interim chair of the FCA, but also now as deputy chair it is a large time commitment. When there are crises, then obviously it’s a bit more demanding, but the core role remains the same: ensuring the organisation has got the strategy and the capabilities to deal with crises as well as achieve its longer term strategic goals. We need to support the executives who day-to-day are fighting fires, but also thinking about the future as well.

One of the key things I do at the FCA is chair its Policy and Rules Committee and as part of that we are looking at the enormous volume of retained EU law and government-driven reforms. We’re working our way through it, working out how those rules can be amended or kept or discarded now that Brexit has happened. But there is risk in attempting to make major changes to so much of the rulebook very quickly.

As well as being part of formal decision making and overseeing our operational effectiveness, board members have to keep up with developments in the economy and in the industry. It is certainly a broad waterfront but that is part of what makes being on the FCA board so interesting.


Is AI a blessing or a curse for consumers, and how can a regulator respond to it?

At the moment there are major concerns about how AI is developing and that needs a global governmental response. But ever since I have been on the boards of public bodies we’ve been using machine learning, or early variants of AI, to help us do our jobs. For example, at the ASA we use machine learning to spot harmful adverts and to flag when we need to be taking action.

Personally, I think if we can deal with the more existential concerns about AI with clear political leadership around how we manage it in this country and internationally, we have got one of those moments in history where the benefits could be huge if we make the right choices. People need to be confident that there is someone keeping a very close eye on how new technology is being developed and deployed; that there are clear rules around its use; and that the biggest businesses leading the innovation aren’t immune to regulation and global standards.


How does your significant executive and policy leadership experience translate into your non-executive roles?

It has been really helpful to have worked in policy making in different settings and to have been in and around Westminster. In all the jobs I’ve done, there’s been a need for leaders to be strong communicators to be successful and that is very clear in regulation too – you need to be transparent and talk in terms that people understand.

There is also the responsibility of overseeing the use of significant sums of public money and needing to ensure it’s being used as effectively as possible. As non-executives we can’t get into all the operational detail, but we do need to ensure we are operationally as efficient as possible.

Above all what I’ve always had is a massive curiosity about what’s going on in the political economy and how can we, as a society, solve problems and have an impact for good. It sounds a bit worthy, but it is what makes me take on this sort of role: I can see the problems and that there are ways to fix them in a purposeful way and that genuinely really interests me.


Are there benefits that you identify coming to the sector as a leader from ‘outside’?

The ‘outside’ perspective does bring really important diversity to regulatory thinking. The wider the background and experiences that are around a board table, the better the decisions that will be made. I see that day in, day out, and that is why it’s so important that we keep working really hard to improve the diversity (in all its forms) of people that join the boards of public institutions. We need to create the inclusive environment that enables that to happen.

There is a way of helping to steer public bodies, often under enormous pressure, by drawing on one’s prior external experience which can be very helpful and also supports senior executives and others in an organisation to help them to do their jobs better. The different experiences of organisational culture play a large part in this too, particularly coming from the commercial world into the public sector.

In your senior leadership roles at Which?, Consumers International, Chair at IPSA and non-exec of ASA you have been central to supporting consumer rights. In your view how should a regulator ensure that good regulation empowers and protects the public at difficult times like this?

I used to spend a lot of time talking to regulators and working directly for consumers.

One of the challenges is that industry lobbyists are numerous, well paid and very vocal. Organised consumer bodies can get out-gunned, but every effective regulator has got to balance those different interests. That’s part of the core job and you can’t do that effectively unless you make the maximum possible effort to understand consumers, their experience and their differences, and try to find ways to bring their views to the decision making.

The FCA works very closely with our statutory consumer panel. It is properly funded and meets with the senior execs and non-execs regularly. The board hears from them every month and there is a really strong effort to get out of our offices and go and meet people in different communities, for example charities that are providing debt advice or community banking services. We do know that we’re not going to please everyone all the time, but it is beholden on regulators to make sure that they’re not just listening to the best resourced and loudest voices.

At the Advertising Standards Authority (ASA) we have just done a piece of research to help us understand how young people use smartphones to interact with advertising. We were looking to identify inappropriate adverts, which in theory should be screened out by the settings on your smartphone. We found that a lot of settings are not reflecting the users’ real age so they are seeing gambling or alcohol-related adverts, for example. It was a really striking example of how not understanding a particular group of consumers behave could have led to an assumption about how harm was being prevented when it wasn’t.


Considering your experience what in your view are the key characteristics and skills required in a leader in a modern regulatory environment?

I look for leaders who are socially purposeful, ethical and care deeply about solving the problems in society. And we need leaders with great communication skills, people who can see round corners and spot problems before they happen. These are very tough jobs but I have huge admiration for the people that take them on.



Richard Lloyd joined the FCA Board in April 2019. He is the Senior Independent Director and Deputy Chair. He has been Chair of the Risk and Oversight Committees, and currently chairs the FCA’s Policy and Rules Committee. Richard was FCA Interim Chair between June 2022 – February 2023.

Alongside his role at the FCA, Richard also chairs the Independent Parliamentary Standards Authority and is a Council member of the Advertising Standards Authority. He was a founding trustee of the Money and Mental Health Policy Institute.

Richard led Which? as executive director from 2011 to 2016. Prior to this he was chief executive of the world federation of consumer organisations, Consumers International; head of policy at the housing charity, Shelter; and worked for two years in No10 Downing Street as a special adviser to the Prime Minister. He was awarded an OBE in 2019 for services to the economy and consumer rights.



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