Reform UK’s Nigel Farage Plans to Strip FCA of Banking Regulation Powers if Elected

In a bold move that could reshape the financial regulatory framework of the United Kingdom, Nigel Farage, leader of Reform UK, has outlined plans to strip the Financial Conduct Authority (FCA) of its authority to oversee the banking industry if his party gains power. According to a report by the Financial Times, Farage, a former metals trader turned politician, is advocating for a sweeping overhaul of the rules governing the City of London, prioritizing economic growth by undoing key reforms implemented after the 2008 financial crisis. This proposal, which would see banking regulation returned to the Bank of England, marks a significant departure from the current system designed to ensure financial stability and consumer protection. Reform UK, currently at the top of opinion polls, is gearing up for the possibility of an early general election in 2027, with Farage positioning regulatory reform as a cornerstone of his party’s agenda. Speaking to allies, Farage has expressed deep dissatisfaction with the FCA, describing it as a 'disaster' and arguing that banking oversight should be consolidated under the Bank of England. 'Nigel thinks the FCA is a disaster and banking regulation needs to go back to the Bank of England,' a source close to Farage told the Financial Times. This stance reflects Farage’s broader critique of the post-2008 regulatory framework, which was introduced to prevent a repeat of the devastating financial crash that shook global markets. The current regulatory structure emerged from reforms spearheaded by former Conservative Chancellor George Osborne under the Conservative-Liberal Democrat coalition government. Following the 2008 crisis—the worst banking collapse of the postwar era—the Financial Services Authority (FSA) was abolished. Its responsibilities were split, with the Bank of England taking on financial stability issues and the newly created FCA tasked with overseeing industry conduct and protecting consumers. Farage’s proposal would reverse these changes, centralizing power with the Bank of England and potentially weakening the focus on consumer protection that the FCA was established to prioritize. Farage’s push for regulatory reform is also deeply personal, fueled by his experience in the 2023 debanking scandal involving NatWest Group’s Coutts private bank. Coutts, a prestigious private banking arm of NatWest, closed Farage’s account, sparking widespread controversy and accusations of political bias. The incident prompted the FCA to investigate the treatment of politically exposed persons by UK banks. While the FCA ordered banks to treat politicians more fairly, it concluded that there was no evidence of accounts being closed due to customers’ political views—a finding that drew sharp criticism from Farage. His frustration with the FCA’s handling of the scandal appears to be a driving force behind his call to strip the regulator of its powers. The implications of Farage’s proposed changes are far-reaching. Critics argue that returning banking regulation to the Bank of England could undermine the specialized focus on consumer protection that the FCA currently provides. The post-2008 reforms were designed to create a clear division of responsibilities, ensuring that financial stability and consumer interests were addressed by separate, dedicated entities. Merging these roles under the Bank of England could lead to conflicts of interest or a dilution of focus on consumer rights, potentially exposing the financial system to greater risks. Supporters of Farage’s vision, however, may see the move as a way to streamline regulation and reduce bureaucratic overlap, aligning with Reform UK’s broader goal of boosting economic growth by cutting red tape. Farage has long positioned himself as a critic of Britain’s biggest banks and the regulatory bodies overseeing them, arguing that the current system stifles innovation and economic dynamism in the City of London, a global financial hub. His party’s platform, which gained traction ahead of its recent conference, emphasizes deregulation as a means to unleash the UK’s economic potential. The timing of Farage’s proposal is notable, as Reform UK kicked off its party conference on Friday, signaling its intent to build momentum ahead of a potential early election. With the party leading in opinion polls, Farage’s rhetoric on financial regulation could resonate with voters disillusioned by the status quo or concerned about the power of large financial institutions. The debanking scandal, in particular, has struck a chord with segments of the public who view it as evidence of overreach by banks and regulators alike. However, the road to implementing such a drastic overhaul is fraught with challenges. Shifting regulatory powers from the FCA to the Bank of England would require significant legislative changes and could face opposition from lawmakers, financial experts, and industry stakeholders who warn of the risks of destabilizing the current system. The 2008 financial crisis remains a stark reminder of the consequences of inadequate oversight, and any move to alter the regulatory framework will likely be scrutinized for its potential to reintroduce vulnerabilities into the financial sector. As Reform UK continues to outline its policy priorities, Farage’s focus on financial regulation underscores the party’s broader narrative of challenging established institutions and advocating for radical change. Whether this proposal will gain traction among voters or face pushback from those wary of tampering with post-crisis reforms remains to be seen. For now, the debate over the future of banking regulation in the UK is set to intensify, with Nigel Farage and Reform UK at the center of the conversation. In conclusion, Nigel Farage’s plan to strip the FCA of its regulatory powers over banking represents a significant and controversial shift in policy direction for Reform UK. As the party prepares for a potential election in 2027, its leader’s vision for the City of London could redefine the balance between economic growth and financial stability. With the memory of the 2008 crisis still fresh, the stakes of this proposed overhaul are undeniably high, setting the stage for a contentious debate in the years ahead.