UK's Financial Conduct Authority drop inquiry into culture of banking

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Thursday, December 31, 2015

The Financial Conduct Authority, one of Britain's banking sector regulators, indicated it has decided to drop an inquiry into banking culture, including practices and payment of banking staff. The inquiry was intended to review "whether culture change programmes in retail and wholesale banks are driving the right behaviour, in particular focusing on remuneration, appraisal and promotion decisions of middle management, as well as how concerns are reported and acted on".

A spokesman for the Financial Conduct Authority stated: "A focus on the culture in financial services firms remains a priority for the FCA[...] There is currently extensive ongoing work in this area within firms and externally. We have decided that the best way to support these efforts is to engage individually with firms to encourage their delivery of cultural change as well as supporting the other initiatives outside the FCA."

The Shadow Chancellor, Labour's John McDonnell, said shutting down the inquiry would be a "dangerous and costly mistake" and said: "This will be a huge blow to customers and taxpayers who are all still paying the price for the failed culture in the banking sector that's been widely attributed to be among the main causes of the crash and the scandals over Libor and price-fixing".

Members of the Treasury Select Committee have also been critical of the cancellation of the review. On Twitter, Labour MP John Mann stated the "FCA surrender to big banks today is entirely from pressure from Treasury and Osborne". Conservative MP Mark Garnier, told the BBC: "There has always been this great argument that perhaps the Treasury is having more influence over the regulator than perhaps it ought to and certainly, if I was looking for a Machiavellian plot behind what's happened here and the tone of the regulator, then I suppose I would start looking at the Treasury."

Richard Lloyd from the consumer group Which? expressed disappointment at the cancellation of the report: "It's disappointing that the regulator has decided against publishing this report on the culture of banking. Cultural change doesn't happen overnight, so despite signs of improvement, the FCA must not take their eye off the ball and should continue to clean up the industry"

The FCA has had no leader since Martin Wheatley resigned in July following an expression of no confidence by George Osborne, the Chancellor of the Exchequer.


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