The Treasury Select Committee has questioned whether the new chair of the Financial Conduct Authority, Ashley Alder, is fit for the job.
Alder’s appointment was announced in July after Charles Randell stepped down from the role in Spring. The new chair is set to take up his role as FCA chair in January 2023 for a five-year term.
He has been chief executive officer of the Securities and Futures Commission (SFC) in Hong Kong since 2011. Alder also chaired the board of International Organization of Securities Commissions (IOSCO) and sits on the Financial Stability Board’s plenary and its steering committee.
Yet MPs expressed scepticism about of his appointment and suitability for the role.
MP Andrea Leadsom said: “We’re here to make sure that you are able to fulfil the job, which is a critical job not accountable to us but accountable to the UK people.
“It just seems to me that somebody who spent their entire career in Hong Kong is very unlikely to have the corporate memory or background or understanding of UK markets to be able to do a good job.”
Leadsom asked Alder how his experience is relevant to the UK as he has worked in Hong Kong for the last 20 years.
Alder said: “I have been a regulator in an international market for 11 years. I have chaired an international organisation, which includes the chairs or CEOs of all the major regulators for six years. As far as the regulatory agenda is concerned, I think I’m knowledgeable and ambitious.
“When it comes to the UK, I’m a British citizen. It is my home, my children are there.
“One of the motivations to do this job is to contribute to an organisation, which is of extreme importance, particularly now to the UK population.
“I probably don’t have the same level of contact within UK institutions compared to someone who’s only worked in the UK would have, but that’s inevitable, because I’ve been here [Hong Kong].”
Treasury committee chair Harriett Baldwin also asked Alder about his connections in the UK.
He said: “Hong Kong operates as a centre of capital flows around Asia, in particular China. In that respect, we have a lot of contact.
“More specifically, I was chair of IOSCO for six years until this October. Through that, I came to know and work with a lot of the people who operate in our fields, such as the SEC [The U.S. Securities and Exchange Commission] chair, Andrew Bailey formerly FCA and now Bank of England, ESMA and other national authorities in Europe.
“When I land in the UK, I’ll be seeing a lot more people in person.”
Leadsom stressed that she felt Alder’s understanding of the way the UK parliamentary system works is “very slim”.
She asked him whether he has been openly challenged from the equivalent of a select committee made up of Hong Kong government representatives.
Alder answered: “We are answerable to a committee of legislative council and have been since we were set up 30 years ago, which is a rough equivalent of the select committee.
“More generally, we appear, either when it comes to legislation or whether it comes to general scrutiny, in front of the full legislative council.
“There isn’t an exact parallel because the political system here is by no means identical to that in the UK.”
Leadsom also asked him what he is looking forward to in the UK.
Alder said: “The first thing I look forward to is the combination of challenges and opportunities, particularly when it comes to FRF [Future Regulatory Framework], but also when it comes to the consumer agenda.
“Secondly, people who are in such roles want to make a positive impact. That’s what we’re here for.
“Although, the opportunity may arise to take other paths, particularly after stepping down from a job like this, that’s not particularly what I want to do, because I want to be able to contribute and make an impact.”
Leadsom also wanted to know how Alder would ensure appropriate operational independence from the Treasury as chair of the FCA.
Alder explained that the FCA is “configurated” to be an independent board, which sets strategies and holds executives to account.
He added: “There is an interaction with the Treasury and that interaction has been elaborated in relation to the integration to FRF.
“Nevertheless, there needs to be interaction in all relationships, not just with the Treasury but other stakeholders as well.
“You need to be clear that you will be listening but also explaining. You will also need to deal with all stakeholders at an arm’s length.
“What is interesting is that under FRF, there is a more elaborate set of oversight mechanisms, including the Treasury, to ask the FCA to review rules.”
Leadsom also pointed out that Alder attended the committee session remotely from Hong Kong.
“It does seem to me extraordinary that you are not here. In particular, for somebody who has spent his entire career in Hong Kong and is not able or willing to make it to the UK to appear before a scrutiny committee for a pre-appointment hearing,” she said.
As Alder’s start date is on 20 February, he said he is planning on moving permanently to the UK during the latter part of January 2023.
He also stressed that his motivation to fulfil his job has increased since the announcement of his appointment. He explained he has been trying to get up to speed with the issues he will look to tackle in the UK.
Alder said: “I have tried, in time available, to read through the Edinburgh Reforms, which crosses into the framework review.
“There is a whole set of questions around the FCA and consumers and the cost of living crisis, which I expect will be dominant over the next few months and possibly years.
“Then, there is the City’s position as a global financial centre.
“There is a fair amount to unpack there. The framework review suggests that the FCA will have a great deal to do. As board chair, I think there are a set of opportunities, but also a set of challenges.
“Not least challenges around resourcing and ensuring that the resources of the FCA are positioned in the right way to cover a pretty large waterfront.”
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