City regulator denies Treasury influence in decision to drop banking review

FCA Logo

The City regulator has defended its decision to drop a review into banking culture, and insisted the Treasury did not use its influence to encourage a softer approach towards the industry.

Responding to a freedom of information request, the Financial Conduct Authority (FCA) said: “We did not consult with any external body when considering whether we should discontinue our thematic review of culture in banks ... We did not advise any member of HM Treasury.”

When the decision to drop the review was revealed on New Year’s Eve it sparked accusations by MPs that that the Treasury had intervened to soften policymakers’ stance towards bankers.

The response, to a series of questions by the Liberal Democrat spokesperson for personal finances John Sharkey, was published ahead of the appearance of the FCA’s interim chief executive Tracey McDermott and the regulator’s chairman John Griffith-Jones before the Treasury select committee next week.

McDermott was regarded as the front-runner to take the top job at the FCA after Martin Wheatley’s contract was not renewed by George Osborne last year. But she announced last week that she did not want the job full time, telling BBC Radio 4’s Today programme: “I have decided that this is not the right job for me at this stage of my career.”

In the response, the FCA said: “You refer to the FCA ‘considering scrapping the publication of its report’ on banking culture. In fact, the decision we made was not to continue the project once the initial phase was completed, rather than to undertake a second phase.

“It would have been that second phase of more detailed work which would, on conclusion, have been likely to result in publication of a report and explains of good and poor practice. There was no report written or in draft to consider ‘scrapping’,” the FCA said.

The regulator said that its business plan for 2015/16 had stated it would conduct a thematic review into whether culture was driving the right behaviour in firms. It said: “The idiosyncratic nature of each individual institution meant that issuing generalised good and poor practice guidance was unlikely to be of sufficient value to justify continuing to focus our resources on the cross-firm work rather than by addressing this firm by firm with individual institutions.

“Culture in financial services firms is a priority for the FCA.”

Lord Sharkey has also tabled questions to the government and a FOI to the Bank of England on the same topic.

Powered by article was written by Jill Treanor, for on Monday 11th January 2016 19.48 Europe/ © Guardian News and Media Limited 2010


JefferiesAnd the Best Place to Work in the global financial markets 2018 is...

Register for HITC Business News