Sarah Hayes, Head of Department, Lending and Intermediaries, Authorisations at the UK’s Financial Conduct Authority joins us in our ongoing Regulator Series. We discuss her career and how the FCA aims to make markets work well – for individuals, for business, and for the economy as a whole. Sarah’s a senior executive with a strong track record for strategic leadership and proposition ownership in financial markets – successfully delivering complex change programs across global organisations. She’s known for doing the right thing and getting things done!
Points of Interest
- 01:55 What the FCA Regulator Does
- 04:32 Phoenixing, Technical Expertise, Expanding Perimeter
- 06:30 Career Journey
- 11:03 Trends & Innovations: Regulatory Sandbox, AI, Machine Learning, Financial Inclusion
- 16:12 Diversity & Inclusion
- 17:36 Rants & Revelations
- 19:13 Rapid Fire Round
…the very low interest rates and the regulatory focus means we have to always be on the lookout for revenue streams that could pose harm to consumers.
I think the best advice that has really made a difference for me is to embrace the imposter syndrome…that little voice that says, someone’s going to come and tap you on the shoulder and say, I think we made a mistake here actually is what drives you to be better.
Kimberley Cole 0:01
This is Risky Women Radio show to connect, celebrate and champion women in risk, regulation and compliance, sharing insight and perspective from the most influential members of our global Risky Women network. On the latest developments, we need to think about, the challenges we should all talk more about, and innovations we are most excited about in governance, risk and compliance. Bringing together the hundreds of senior women professionals already connected with a new emerging group of leading women and men. I’m Kimberley Cole, your Chief Risky Woman.
Kimberley Cole 0:38
This episode is brought to you by our founding sponsor Refinitiv. Refinitiv serves more than 40,000 institutions in over 190 countries. Refinitiv provides information insights and technology that drive innovation and performance in global financial markets. Refinitiv enables the financial community to trade smarter and faster, overcome regulatory challenges and scale intelligently.
Kimberley Cole 1:03
Welcome to Risky Women Radio. Today’s risky woman is Sarah Hayes. Sarah is head of department lending and intermediaries authorizations at the Financial Conduct Authority here in London. Welcome, Sarah.
Sarah Hayes 1:16
Kimberley Cole 1:17
Great to have you here. Just a quick intro as to Sarah before we let her tell her career journey and story. Sarah is a senior executive with a strong track record for strategic leadership and proposition ownership in financial markets, and successfully delivering complex change programs across global organizations. Sarah is known for doing the right thing and for getting things done. So great to have you here today, Sarah. Let’s start with the Financial Conduct Authority and show us briefly around what the Financial Conduct Authority does and is responsible for and then your area within the FCA.
Sarah Hayes 1:55
So the FCA the Financial Conduct Authority is the regulator of the UK financial system. So we oversee about 60,000 firms. And we put rules in place about how firms operate so the interests of consumers are protected, and the financial markets work well. And it covers the full range. So we are the gateway for finance firms and individuals wanting to operate, we then oversee them. And if they don’t follow our rules, we take action to protect consumers. And the division that I work in authorizations is at the front end of that. So we assess the applications from new firms and individuals who want to become regulated, and then also from existing, regulated firms who are applying to change the permissions but under which they operate.
Kimberley Cole 2:39
So that sounds like a very broad role. And a very important role conduct comes up a lot in in the financial markets, and it’s very important. So obviously, you’ve got protecting consumers looking at the financial markets, but also looking at competition, big role, lots of different areas. That, that both the FCA covers and and also your department. So tell us a bit more about what your department is responsible for.
Sarah Hayes 3:07
So it’s responsible for authorizing firms, individuals in the consumer credit market and in retail intermediaries. And what that actually covers is all companies that are looking to offer any form of debt services. The, in the lending side, it’s anything from pawnbroker’s to peer to peer through to the high cost credit market. And, and then I’ve got on the retail side, I’ve got financial advisors through to insurance intermediaries. So it’s a very wide range. When you look at it, you actually say well, they have the opportunity if incorrect to significantly harm customers, because we look after the vulnerable customers who, potentially is the only way they can access money. And on the other side, it also involves people with their life savings and pensions. And so it’s really important that firms that are authorized, could actually meet the rules that we’ve set out for them to do.
Kimberley Cole 4:06
Excellent. So protecting consumers protecting financial markets, and also then looking at competition. And given the changes in the way the financial markets and the new innovations that are happening. I imagine it’s continually changing and, and no wonder you said this sort of tricky applications that are coming through. So tell us about what’s the sort of day in the life of a department head at the FCA look like?
Sarah Hayes 4:32
So it won’t surprise you to know that no day is the same. But primarily my job is to help with tricky applications. So my department assesses about over 100 a month. So I get involved in ones where they either have complex business models, or where there’s innovation and a new product or service they’re offering or where there’re concerns about the business model of the individuals. So to give you kind of examples, we look at, so recently I’ve been concerned about phoenixing, which is a technical term that that basically describes where firms might try and start up a new business, when they know they’ve got liabilities in having to pay redress to customers, and it’s how do we spot that? And what do we do to try and prevent that in the market. And also we’re looking at where people are trying to offer new services, but don’t have the right technical expertise, you know, and that will lead to inappropriate systems and controls being put in place. Also, as with all these jobs, I sit on lots of committees, looking at how we make the right regulatory judgments, and we also get involved, you know, regulation is changing globally. And we have to also change as well as to to see as things move. And so for example, I’ve been sitting on the project board for when we brought in claims management companies into the perimeter of the FCA. Outside of that, there are a number of things but probably primarily, it’s around people and capabilities and diversity and inclusion. Are kind of key areas I get involved in.
Kimberley Cole 6:13
Excellent. Okay, so I think we’ll probably dig into a bit more around some of those areas as we get into the expert opinion piece. But let’s talk about your career more specifically, and can you give us a walk through and tell us what have been your highlights and your career journey to date?
Sarah Hayes 6:30
It started quite a while ago, when I left university I was lucky enough to get on the graduate scheme of Hill Samuel bank, which was a UK merchant bank and that gave me a really good breadth of experience across all of the financial markets and working both on the trading floor but also in corporate loans and loan syndication. I then went across to UBS and started on the equity side and started in corporate broking which was fascinating because we spent time advising chairmen, chief execs, and finance directors of the FTSE 350 company, quite a lot of my sector was transport and so I then became the specialist sales on the trading floor for the transport sector, which at the time was right in the middle of we were everything was being prioritized by the railways, the buses, we were spending a lot of time with it on airports and airlines. So it was a fascinating time. And then I made a kind of completely different move which kind of came from a headhunter because I hadn’t thought of it which is I went and joined what was Reuters at the time on the vendor side, looking at product strategy and marketing for the domestic equity product, selling to both the banks, the sell side, but also to the investment community on the on the buy side, and was at Thomson Reuters for a really long time.
Kimberley Cole 7:50
Weren’t we all!
Sarah Hayes 7:51
But it was but it was fascinating because about every 18 months to two years, you, you got promotions, amazing so I moved from domestic equities to European equities around the time the Euro came in through to global equities. And I ended up heading up the strategy across all of the trading products. So it was a fascinating time. And then I did another completely different move, which is four years ago, I joined the FCA and had become very interested in in all the regulation on the back of the sort of the global crisis in 2008, and had been very involved in how Thomson Reuters had responded to that. And so that was the move across. And I spent the first three years looking after the prioritizing the change portfolio. So looking at both the change internally and externally that the organization was going through and then about 18 months ago, became head of department for authorizations.
Kimberley Cole 8:54
Fantastic. I mean, that’s really interesting, I think in terms of showing the sort of twists and turns and different opportunities that present and you know, can make a very 360 degree view of the market that you’ve had.
Sarah Hayes 9:07
Kimberley Cole 9:08
Fantastic. What would you call out as some of your most important achievements?
Sarah Hayes 9:15
So probably the ones where I worked with the industry on some of the changes. So one of them would be how we displayed order books at the time we went electronic. So how do we, how do we show that how do we actually execute those? Another other one was, as we moved electronic, and we had that exponential growth in, in information coming out of that, How do we differentiate between a human trader and what they view and a machine even though human traders believe they can see as much as the machine and I worked with our clients globally to create a solution that was commercial for everybody. And that was probably a really big success for me.
Kimberley Cole 10:01
And I think that’s, you know, continues to be huge this now move from humans to machines across so many industries. And it’s a it’s a massive shift. So let’s actually talk a little bit more about your current role, and even sort of what your team does more broadly. So your managers are responsible for the day to day delivery of the lending and intermediary authorization strategy. Also ensuring that the risk appetite and control frameworks are effective so the role involves the assessment of large volumes of applications that vary in complexity. You said some of them are very tricky, and to assess and mitigate the risks in the consumer credit intermediary sector. So I guess tell us a bit about you know, what are the trends obviously, there’s lots of things going on that are disruptive, etc. But you’ve got volume coming through and different, you know, types of products I guess coming to market, what are you seeing?
Sarah Hayes 11:03
So and so we are seeing lots of different products, and some of them are really innovative and looking at how we serve markets and consumers that haven’t been served before. So we’re, we’ve been working closely with the industry on alternatives to high cost credit, and looking at opportunities there. We’ve also seen quite a lot of artificial intelligence in machine learning about how to help decision making so you know, offering advice, how do we make sure that that’s built so that it a) can be fair to consumers, but also can identify valuable customer and rather than see the system all the way work all the way through? The other thing, that was all on the more positive side, I think also, the very low interest rates and the regulatory focus means we have to always be on the lookout for revenue streams that could pose harm to consumers.
Kimberley Cole 11:58
Interesting. So is that sort of looking at financial inclusion as well as just the existing market? Like, how do you include more people in there?
Sarah Hayes 12:09
Yeah. And how do we make it so people that and that’s across all of it, not just in my department, but across everywhere is how do we make sure people have access to the financial services, both in terms of socio economic, but also in terms of any form of disability there were there, were always making sure that it’s fair for all consumers. And we do quite a lot in the innovation space. So we have a number of channels that help support including our regulatory sandbox, which allows people to come in and test out new products and see whether they work but also see how they fit from a regulatory point of view. And that’s a key area that the FCA is very involved in.
Kimberley Cole 12:50
And so that that’s, that’s very interesting. So the regulatory sandbox, that’s so the industry can come in and use the sandbox as well as, how do you work with other regulators are they involved in that as well?
Sarah Hayes 13:03
So it’s not my area of expertise.
Kimberley Cole 13:04
Sarah Hayes 13:04
But we work with we do it with the other regulators. And I know that that some of them have set up their own regulatory sandboxes as well. I think it’s really key that there’s a safe space for people to try it without, sometimes there’s that balance of the innovation versus is it treating the customers fairly.
Kimberley Cole 13:24
Yeah. So obviously, you mentioned AI and machine learning. And obviously, there’s some customers or or service providers using those and making sure that they’re fair. Are you using AI and machine learning as well within the within your area or within the FCA for other regulatory?
Sarah Hayes 13:44
Yes, so so we, I think we said we have a large number of firms. So it’s trying to identify where are the outliers that could pose a risk to consumers. So we’ve been looking at how we use technology there, how we share intelligence across, you know, across the organization, it’s been worked on in many different areas. So when we, particularly for firms or individuals, how do we make sure we share that. And also I mentioned earlier about phoenixing, it’s trying to identify, if someone comes back in do we know immediately that they are someone who’s been also operating in a different area. So we use it a lot. Where we’ve also used technology is in trying to improve the service for the firm’s trying to come into the gateway. So, for example, we have now have a capability called Track My Application. So similar to you having in if you buy something online, you want to see how it’s progressing. If you submit an application, it can then help you see how it’s progressing through the assessment stage.
Kimberley Cole 14:43
So improving the customer experience from your side as well. And obviously, lots of these areas that you’ve mentioned, whether it’s the use of tech or just the way that you’re, you know, process and procedures are working is really, you know, ensuring that trust is is there and, you know, trust in financial markets is absolutely key, what what else you doing to ensure that trust is built and maintained?
Sarah Hayes 15:07
So if you look at the way we assess firms, we, we we want to have trust in the business model. So it benefits the consumer, but also the firm in that balanced way. We have to have trust firms have the right resources, both financial and obviously skilled resources to be successful and sustainable. We want to make sure that there’s trust in the fact that consumers have full transparency of all the products and services, especially the terms and conditions in those. And we need to get trust that customers are being treated fairly. So it absolutely runs through the judgments that we make.
Kimberley Cole 15:43
Yeah, very, very important. That’s really interesting. It sounds like there’s a lot going on from internal use of technology, looking at how the the customers and the service providers are also using technology is absolutely key. You mentioned diversity and inclusion and we have, can I have a little chat about what what things are you doing there? What’s what’s happening within the FCA from a diversity and inclusion perspective? And, and, you know, how, how important do you feel about that?
Sarah Hayes 16:12
Passionately! So externally we do an awful lot with the industry about diversity inclusion, but internally, it’s it’s a key priority, both in terms of gender, but also all other forms of diversity. And I think the really key thing is, is it’s connected with inclusion. So it’s called diversity and inclusion. And as someone who spent my life working in the wholesale financial markets, inclusion is the key part. It’s not just being there, but it’s having that breadth of thought and, and challenge. So I’m very involved in in making sure we already do, so for the first time in my career, my gender is irrelevant, which is the most liberating thing, see Kimberley nodding, but it really is, and I think and I want that inclusion for for all, everybody. Everybody should be themselves at work. And and I think so we’re we’re looking at lots of different initiatives to make sure people have a voice. And we have a level playing field in how we provide opportunities and promotions and those sort of things.
Kimberley Cole 17:17
Excellent. Yeah, I think it’s some interesting increasingly on diversity and inclusion, but also in the technology and the data and making sure that there’s no biases in the data and all of those kind of…
Sarah Hayes 17:28
And we look at that a lot and that I think, is one of the challenges that we’re going to see in in AI as well.
Kimberley Cole 17:36
Yeah, exactly. Fantastic. Okay, so let’s now move on to one of my favorite sections, the rants and revelations.
Kimberley Cole 17:48
Connecting, celebrating and championing women in risk, regulation and compliance Risky Women Radio takes an intimate look at the Rants and Revelations of the top women shaping the debate of the industry.
Kimberley Cole 18:04
So, if you’re thinking back on, you know what advice you were given maybe in your career that you feel is really helped you, what would what would that piece of advice that you would suggest that would be useful for others?
Sarah Hayes 18:17
Right at the beginning of my career, the best advice I got was “Don’t pour the tea when you go to meetings,” but we don’t have that anymore. But that as someone who loves tea in my hands and watch it go cold. But I seriously I think the best advice that has really made a difference for me is to embrace the imposter syndrome. So we all have it, that little voice that says, someone’s going to come and tap you on the shoulder and say, I think we made a mistake here actually is what drives you to be better. And you have to find the way to balance it. So it helps you as long as it doesn’t drown out all other voices. And so that’s a key one for me.
Kimberley Cole 18:55
Great piece of advice. I think that applies you know, across the board to everyone at different times, so excellent. And then what’s your rant? You know, what’s that one thing that if you had the power to change and wave your magic wand, what would that be?
Sarah Hayes 19:10
Inclusion for all.
Kimberley Cole 19:11
Sarah Hayes 19:12
It really is.
Kimberley Cole 19:13
Perfect. All right, our rapid fire round.
Kimberley Cole 19:17
Risky Women is a vibrant network at the center of the global community in a rapidly growing, evolving and influential industry. Given the continued pace of change our rapid fire round revisit the most pressing topics to share ideas and offer listeners new perspectives.
Kimberley Cole 19:35
What is your one word to describe the world of governance risk and compliance?
Sarah Hayes 19:40
Kimberley Cole 19:43
And your cure for the cost of compliance and the waves of regulatory change?
Sarah Hayes 19:48
Firms putting the customer, treating the customer fairly at the center of everything they do.
Kimberley Cole 19:53
Back to trust which is great. Are you optimistic, pessimistic or neutral in your outlook for the year ahead?
Sarah Hayes 20:02
So I’m a natural optimist that that’s currently under pressure at the moment.
Kimberley Cole 20:07
We’ve had a bit of that recently. And then then a little more fun. What is a book that you would recommend that everyone reads?
Sarah Hayes 20:16
Oh I read this summer Michelle Obama’s Becoming – absolutely inspiring, insightful, funny. She’s, you get a real sense of who she is and the challenges she’s faced and how she’s overcome them.
Kimberley Cole 20:31
I actually listened to it using Audible because she reads it. Which is fantastic because you’re actually getting it in her voice. So I agree. I love that too. And something to watch?
Sarah Hayes 20:42
Killing Eve, if you haven’t already. Go watch it.
Kimberley Cole 20:44
Yes, excellent. I loved it. And your favorite podcast?
Sarah Hayes 20:50
So my favorite podcast is, I don’t know if you know it, it’s the it’s called the Radio 5 Rugby Union podcast. Absolutely brilliant and I love it. I love the kind of conversation that it has. And it brings in current and past players and managers. And it’s great company for me on my Sunday morning run.
Kimberley Cole 21:10
Well, that’s a new one for me to add to my list. So thank you very much, Sarah Hayes. It’s been a pleasure talking to you on Risky Women Radio.
Kimberley Cole 21:18
Kimberley Cole 21:22
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Kimberley Cole 21:37
Thank you for listening to this exciting episode of Risky Women Radio to connect, champion and celebrate women in risk, regulation and compliance. I’m Kimberley Cole, based in Hong Kong. For more information on the Risky Women global network, head to our website and the episode notes and please be part of the ongoing conversation by subscribing to this podcast, connecting with us at Risky Women on Twitter or even reaching out to me directly by email.