Britain’s regulator secretly dropped two major banking reviews in the space of just a few months and now politicians are worried that the Financial Conduct Authority are reverting to being a “light touch” when it comes to the industry.
The chairman of the Treasury Select Committee, which is made up of a panel of politicians that focus examine the practices of financial public bodies as well as banks in the financial industry, Andrew Tyrie MP confirmed on BBC Radio 4’s Today programme that he would be hauling in acting CEO of the FCA Tracey McDermott and chairman John Griffith-Jones to explain themselves:
“Each one [dropping the reviews] aren’t crucial but cumulatively they do give the appearance of a weakening of a resolve and certainly the FCA’s decision to drop its review into banking culture looks odd, after all it was in their business plan.
“And that’s why the committee has decided to haul in the chairman and chief executive from the FCA to find out what is going on. Also to make sure they’re getting on with implementing the new challenges they have been given by parliament.
“They have a tough job and we want to make sure they’re doing it properly on behalf of millions of taxpayers and consumers.”
This week Business Insider confirmed that the FCA quietly decided months ago not to take any formal action in its review of allegations that HSBC’s Swiss private banking arm helped wealthy clients dodge tax between 2006 and 2007.
This is the latest in a line of moves that suggest the FCA is returning to the “light touch” approach which led politicians and market experts to accuse it, and the FCA’s predecessor the Financial Services Authority, of “falling asleep at the wheel” when it comes to keeping banks in check and rooting out wrongdoing.
On New Year’s Eve, the FCA scrapped a major report into Britain’s banking culture. It instead chose to work directly with the banks, behind closed doors. It is being viewed as a victory for the banks.
Again, “there was no investigation, so there was nothing to drop,” an FCA spokesperson said on December 31. “If there is no review, there’s no findings.“
In addition, the removal of Martin Wheatley — who was seen as an intrusive regulator — as FCA chief, and the appointment of new acting CEO Tracey McDermott (who began the closed door “culture” meetings) indicate that the FSA is no longer interested in aggressively investigating potential wrongdoing at banks, at least in public.
The non-decisions in both cases leave the public and politicians in the dark about what is really going on inside major banks.
Now politicians seem to be really pissed off.
“We now have a body that is almost rudderless,” said Shadow Chancellor John McDonnell on BBC Radio 4’s Today programme today about the fact that the FCA doesn’t have a permanent CEO.
McDonnell added that “we are reverting to type” and all the lessons learned in the crisis may be forgotten.