While many sought refuge indoors during Storm Darragh’s wrath in December, Sam Woods took to the challenging waves on his wing foil.

The chief executive of the Bank of England’s Prudential Regulation Authority, an enthusiastic windsurfer, took up winging during the pandemic after discovering the sport through YouTube videos.

“It looked fun, so I treated myself to a wing foil for my fiftieth birthday and began learning the ropes,” Woods shared.

On that stormy weekend in Teignmouth, Devon, Woods found himself navigating the waves, joking that he spent not a small amount of time falling off his board.

Reflecting on his experience, he recounted an encounter with a fellow water sports enthusiast who questioned his sanity for braving the stormy conditions.

Woods, 51, who also serves as deputy governor of the Bank, acknowledges his risk-taking nature. He noted, “If someone in my position didn’t embrace risk, they’d likely find their role quite dreary.”

His philosophy may resonate positively with Chancellor Rachel Reeves, who has called on regulators to adopt a bolder approach to risk to stimulate the lackluster UK economy. Woods’ inclination towards risk could also be intriguing to City executives who have long criticized the Prudential Regulation Authority and other watchdogs for their conservative stance and heavy regulations.

In the aftermath of the 2007-09 financial crisis, regulatory environments have tightened significantly, and much of Woods’ career has centered on formulating these regulations.

Originally from New Zealand, Woods was educated at Winchester College and later the University of Oxford. He began his career in the Treasury in 2001, where he played a pivotal role in establishing UK Financial Investments to manage government stakes in the banks that received bailouts.

Woods contributed to the Independent Commission on Banking, which implemented ring-fencing measures to enhance the safety of financial institutions during future crises. Eventually, he transitioned to the Financial Services Authority, helping to create the Prudential Regulation Authority and the Financial Conduct Authority. He rapidly ascended to lead the PRA in 2016 and is currently nearing the end of his second five-year term, which concludes in June next year without the possibility of extension.

His remaining tenure is likely to be defined by Reeves’ campaign for regulatory reform, with Woods recognizing that this represents a key moment for the City’s regulators.

“We are clearly at a pivotal point,” he commented, indicating a time to reassess regulations since completion of the post-crisis rebuild.

The objective remains to ensure system stability while asking, “Is there an opportunity to streamline the regulatory framework?”

Woods suggests that there is potential for simplification, stating, “We’re aiming to clear away unnecessary complexities while maintaining essential oversight.”

Both the PRA and the FCA are under increasing scrutiny from Westminster and within the City to demonstrate their contributions to enhancing the economy. In 2023, the government assigned them a secondary statutory objective focused on improving the UK’s international economic competitiveness.

Although this new goal ranks below the PRA’s core mission of ensuring the safety of financial entities and protecting insurance policyholders, it gains prominence, especially after the economy stagnated in the latter half of last year.

Executives within the financial services have voiced growing concerns over the regulatory landscape, arguing that regulators have not fully capitalized on the freedoms provided by Brexit. Reeves has aligned with this viewpoint, affirming in November that regulations aimed at curbing risk-taking have been excessive. Reports indicating Santander’s frustrations with the UK’s regulatory climate and potential withdrawal from retail banking have intensified these discussions, despite the bank’s insistence that it has no plans to sell its UK business.

Nevertheless, Woods asserts that the PRA is already making strides toward its new objectives, including removing the cap on banker bonuses post-Brexit and adapting international capital standards, known as Basel 3.1, to enhance the competitiveness of UK banks.

Further changes are anticipated, with the authority currently consulting on adjustments to bonus regulations and evaluating measures to reduce the reporting burden on banks. Proposals have also surfaced regarding the establishment of a “concierge service” to assist foreign financial entities interested in entering the UK market.

While critics might argue that easing regulations could create future crises, Woods is confident: “I don’t believe anything we’re currently undertaking poses a high risk of reintroducing issues similar to past crises.”

For instance, the previous cap on bonuses, which aimed to deter risky behavior in banking, hasn’t resulted in concerning compensation practices since its removal. “We’re monitoring the situation closely and have no pressing concerns about current practices,” Woods reported.

When discussing the potential for political interference in British regulation, he asserted, “It’s concerning if government input leads regulators to stray from their core mandates. Fortunately, that’s not the case here.”

However, the evolving regulatory landscape presents ongoing challenges.

Concerns have emerged regarding shadow banking, which includes hedge funds, pension schemes, and insurers that have rapidly expanded over the last decade. Regulators have highlighted the risks posed by this largely unregulated sector to financial stability, evidenced by incidents like the crisis following the 2022 mini-budget.

Yet Woods is skeptical about a major tightening of regulation for non-bank entities, either domestically or in other jurisdictions, indicating that the regulatory focus will shift towards enhanced surveillance techniques.

This shift is partly due to a focus on growth and competitiveness as well as the need for proportional regulations, which also relies heavily on international cooperation.

When prompted about his primary concerns, Woods pointed to two aspects of shadow banking: the swift ascent of private credit and the rising trend of funded reinsurance deals involving international firms made by life insurers. He also highlighted persistent threats from cybersecurity issues.

Looking ahead, Woods faces uncertainties regarding the American approach to Basel reforms, having postponed the introduction of these standards for the third time until January 2027, influenced by the unpredictability of US implementation under President Trump. There’s speculation regarding the US potentially abandoning Basel altogether. However, Woods believes this is unlikely since major US banks benefit from a level playing field.

Nonetheless, if the US opts out, “it would pose significant global challenges.”

As Woods approaches the end of his term, he reflects on his achievements at the PRA while also contemplating future opportunities—either in the public or private sectors. He quipped, “I hope to have time to pursue another significant role, provided I stay afloat on my wing foil!”