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Nikhil Rathi

Nikhil Rathi

ON THE face of it, Nikhil Rathi is a very pleasant and softly spoken man, a Gujarati who has been vegetarian all his life. He lives unostentatiously with his wife and three children. He is not seen at high society parties. But people should beware.

He was competitive enough to be the under-12 tennis champion in Cumbria. When Rishi Sunak was chancellor, Rathi was appoined as the £455,000 a year chief executive of the Financial Conduct Authority (FCA) in June 2020, replacing Andrew Bailey who became governor of the Bank of England. Rathi was given the job ahead of others because he was considered to be “the outstanding candidate”.In a memorable turn of phrase, Rathi declared: “Together, we need a new enlightenment that can spark a solution to financial inclusion.” Put simply, Rathi’s job is to protect the ordinary person in the street from the vultures in the corporate world. And he seems to be taking his responsibilities very seriously.


He appears to have expanded his role so that he now wants to prevent fraud, identity theft and cyber attacks; encourage those without bank accounts to open one; make sure financial institutions don’t rip off their customers; offer advice on the wisdom of saving for a rainy day and for pensions; help the poorest in society cope with the rising cost of living; and generally adopt a policy of inclusion so as to shepherd the marginalised into the mainstream.

He has set out how the FCA is working: “Financial markets must be honest, competitive and fair so consumers get a fair deal. We work to ensure these markets work well for individuals, for businesses, and for the growth and competitiveness of the UK economy.

“We do this by regulating the conduct of nearly 45,000 businesses; prudentially supervising around 44,000 firms; and setting specific standards for around 17,000 firms. We focus on reducing and preventing serious harm, and setting higher standards and promoting competition and positive change.

He recognises that Artificial Intelligence is already here. “Depending on who you speak to, AI could either lead to the destruction of civilisation, or the cure for cancer or both. It could either displace today’s jobs or enable an explosion in future productivity. The truth probably embraces both scenarios. At the FCA we are determined that, with the right guard rails in place, AI can offer opportunity. The prime minister said he wants to make the UK the home of global AI safety regulation.”

All this gives him a great deal of power so what is Rathi’s back story? He is a familiar figure to Indians because he used to launch “masala bonds” at 8am when he was CEO at London Stock Exchange plc from 2014 to 2020.

He was born on August 5, 1979, grew up in Barrow-in-Furness, Cumbria, the son of Madhu and Dr Rajendra Rathi, a local magistrate. He was educated at Chetwynde School, followed by St Anne’s College, Oxford, where he took a First in Philosophy, Politics and Economics. He clearly knows his way around Whitehall. He served as a private secretary to prime ministers Tony Blair and Gordon Brown between 2005 and 2008. He then worked for HM Treasury from 2009 and 2014.

To Rathi “financial inclusion matters deeply”. “The ultimate example of financial exclusion is not having a bank account, the most unassuming but most essential financial service,” he explained. “We estimate that some 1.1 million adults – or 2.1 per cent in the UK – are unbanked – down from 1.3 million in 2017. The proportion of 18-24-year olds unbanked is more than double that of those aged 25 and over. 10 per cent of Muslims have no account; and 7 per cent of those without work. Those with poor financial numeracy were three times as likely to be unbanked – at 6 per cent; 7 per cent for those with no educational qualifications.”

He agrees with Sunak that schoolchildren should do some form of mathematics till the age of 18, partly because that would make them better able to manage their money, avoid getting into debt and take wise decisions on pensions.

“That is why the prime minister’s vision that every young person should be equipped with the maths skills that they need could also play an important part in giving young people the confidence both to run their finances and to obtain products that are right for them,” he said. “I would go a step further and say as well as improving our maths literacy, we could all benefit from an intense focus on digital skills as increasingly access to financial services and digital capability go hand in hand.”

He is a great admirer of the drive towards digital in India where illiteracy rates and the proportion of those without bank accounts has been much higher than in the UK.

He said: “In India, the so-called digital stack which connects private companies to government IDs (identity documents), payment networks and data, has led to 450 million bank accounts being opened by last year.”

And he went on: “One firm I met on a recent trip to India uses AI and machine learning to assess client’s creditworthiness for loans and BNPL products. The firm specialises in servicing those who do not have a credit score, for example, younger people.”

He argues people need to get into the habit of saving for the future, and that financial institutions should be prevented from casting people considered “unprofitable” into the cold. And banks should be forced to tell their customers of the best interest rates available to them which in the past they have neglected to do.

“The proportion of the population aged over 65 is set to rise from 18.6 per cent to 24 per cent by 2043. More than 17 million people – or nearly one in four – will be at or near retirement age in the next two decades. More adults need also to save to fund social care.

“Younger people, who are now more likely to have lower net incomes to pay for their student loans and are hit with an ever-bigger challenge to get on the housing ladder, will be possibly left to bear the brunt of this.

He is addressing some of the issues around pensions. “Short term crises and actions can lead to long-term effects,” he commented. “Despite auto-enrolment, pension schemes participation will also be affected by a growing number of self-employed people. This has gone from 8 per cent of the workforce in 1978 to 15 per cent today. And then there is the trend of over-55s taking out substantial lump sum payments from their pension pots to take advantage of tax breaks – perhaps without full regard to the repercussions for their incomes down the line.”

down the line.” “So having laid out the challenge, how do we tackle these issues?” he wondered. He highlighted areas in which the FCA was taking action: “Financial education and numeracy; technology; commercial incentives; diversity and inclusion, numeracy; and financial capability.”

He has strongly backed the case for diversity: “A genuinely diverse and inclusive workforce will better understand the needs of a diverse customer base.”

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