FCA Regulator Moves to Consultancy Raising Questions Over Revolving Door Practices

A senior official from the Financial Conduct Authority (FCA) has made headlines by joining a consultancy firm with ties to the motor finance industry. Roma Pearson, formerly in charge of the consumer finance division at the FCA, has taken up a role as Senior Advisory Director at Square 4 Partners. This move comes amidst ongoing scrutiny of motor finance commissions and has sparked debate over the so-called “revolving door” between regulators and the private sector.

Square 4 Partners, founded in 2021, is a consultancy actively advising motor finance firms, including Honda Financial Services, Oodle Car Finance, and Blue Motor Finance. The firm also has strong connections to the industry’s main lobbying group, the Finance & Leasing Association (FLA). Pearson’s new role has raised concerns about potential conflicts of interest, with critics highlighting her previous involvement in investigations related to undisclosed motor finance commissions.

The FCA is currently awaiting a Supreme Court ruling that could shape its enforcement approach on cases where motor finance providers failed to disclose commission structures to customers. While no impropriety has been suggested, reports estimate the mis-selling claims could cost the industry as much as £30 billion. Critics have flagged Pearson’s move as another case demonstrating lax oversight of career moves between regulators and the companies they regulate.

During her tenure at the FCA, Pearson oversaw investigations into misconduct within the motor finance sector until stepping down from related responsibilities last September. She formally left the FCA earlier this year, following a period of gardening leave and a transfer to a non-frontline position. Pearson has stressed that she acted in line with professional standards to avoid conflicts of interest.

This is not the first time concerns have arisen over regulators moving into private-sector roles. Previous high-profile examples include Sir Hector Sants, former chief executive of the Financial Services Authority (FSA), assuming a compliance role at Barclays, and Tracey McDermott, another FCA executive, transitioning to Standard Chartered. Critics argue that such transitions risk undermining the regulator’s independence and reputation.

Supporters of the practice claim that career moves in both directions between regulators and private industry bring valuable expertise and foster an understanding of regulatory frameworks. However, transparency campaigners, most notably Andy Agathangelou of Transparency Taskforce, see it as evidence of a “cosy relationship” between the regulator and industry, which may weaken public trust in the FCA’s impartiality.

Square 4’s leadership includes several former FCA staffers, further highlighting the overlap between the regulatory agency and the advisory sector. While Pearson maintains that regulatory consultants can play a positive role in protecting consumers’ interests, scrutiny over such career shifts is unlikely to abate given the industry’s ongoing scandals.