In a hearing in parliament on Tuesday, Rathi said the regulatory structure in the U.S. — where there is a separate consumer watchdog — created a “complicated landscape” and wasn’t much liked by the American industry.
But there are softer options available. The government could for instance take steps to streamline the watchdog’s day-to-day business and elevate the importance of the wholesale side of its work, alongside its consumer mandates.
The Treasury could also hand a new chief executive a mandate to shake up the authority and try and free the City from more of what it views as unnecessary red tape to encourage more risk-taking.
Plus, even if Labour doesn’t pursue a radical split in government, the Conservative opposition could pick up the prospect.
Former City minister Bim Afolami, who lost his seat in the election, raised the idea at a House of Lords hearing in November, arguing the FCA “gets it from all sides” by having to balance the business-to-business side of the City with consumer protection.
“In my view, you would have a wholesale regulator and a retail regulator, and the remit for both of them would be different,” the former Conservative politician said.
James Fitzgerald contributed reporting.