On the credit card announcement, what was especially noticeable was that the substantive response came from the FCA, rather than Government Ministers.  Chief Secretary to the Treasury, Liz Truss MP, offered a few brief sentences off the back of McDonnell’s speech, but it was left to the FCA’s Andrew Bailey to give us the true indication of what ‘the Government’ response would be.

On the same day as the announcement, Bailey told Reuters: “We are not there at the moment” on caps.  He said the FCA has been doing “a lot of work” on credit cards and was finalising measures following public consultation. “Our general approach is, look, we would rather like to see what the effect of those measures is” (sic).

He followed up these comments in his Mansion House speech of 4 October.  This speech was significant for the same reason — it revealed where the power really lies when it comes to policy making.

He used the occasion to speak about the FCA’s expanded role in public policy.  In doing so, he confirmed what many of us have realised for some time —that the FCA is the main policy setting body, not simply an implementer and overseer of policy set by the politicians.  Thus, it is Bailey who responds substantively to McDonnell, not Treasury Ministers.

This is a fundamental change from the old Consumer Credit Act / OFT regime. It is politically advantageous for the Government because ministers no longer have to answer difficult questions about high APRs: they simply defer to the regulator.  But it also raises very serious questions about accountability and scrutiny.  If ministers hive off their responsibilities to technocratic regulators with powers to right new rules at the drop of a hat, at what point does a democratic deficit begin to open up?

The FCA is of course answerable to Parliament but this places a big demand on parliamentary capacity; and with Brexit looming, Parliamentary is going to be slightly busy with other matters!

In this environment, the roles of industry representatives become more important. It falls to the CCTA and others to keep a close watch on the regulator, and to raise the alarm with the legislators if there are issues or actions that require scrutiny.