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Banking culture inquiry shelved by regulator FCA | Banking culture inquiry shelved by regulator FCA |
(about 4 hours later) | |
The City regulator, the Financial Conduct Authority (FCA), has shelved plans for an inquiry into the culture, pay and behaviour of staff in banking. | The City regulator, the Financial Conduct Authority (FCA), has shelved plans for an inquiry into the culture, pay and behaviour of staff in banking. |
The FCA had planned to see whether pay, promotion and other incentives contributed to misconduct seen in previous years. | The FCA had planned to see whether pay, promotion and other incentives contributed to misconduct seen in previous years. |
The review was meant to be a major piece of work by the watchdog. | The review was meant to be a major piece of work by the watchdog. |
Mark Garnier MP, a Conservative member of the Treasury Select Committee said he was "disappointed" by the decision. | Mark Garnier MP, a Conservative member of the Treasury Select Committee said he was "disappointed" by the decision. |
Banks in the UK and abroad have been caught up in numerous scandals resulting in huge fines from regulators across the world. | Banks in the UK and abroad have been caught up in numerous scandals resulting in huge fines from regulators across the world. |
In May the news agency Reuters calculated that 20 global banks had paid £152bn in fines and compensation to customers since the 2008 financial crisis. | In May the news agency Reuters calculated that 20 global banks had paid £152bn in fines and compensation to customers since the 2008 financial crisis. |
Politics | |
Some commentators have speculated there was a political motive behind the decision. | |
This was denied by both the Treasury and the FCA. | |
An HM Treasury spokeswoman said: "The government was not involved in this decision, to suggest otherwise is wrong." | |
The FCA said: "Having undertaken an initial piece of scoping work we decided that a traditional thematic review would not help us achieve our desired outcomes and we would therefore take forward our work on culture through other routes. This was an FCA decision. HMT [the Treasury] were not involved." | |
Missed opportunity | Missed opportunity |
The FCA said it was working with individual firms to help them deliver "cultural change". | The FCA said it was working with individual firms to help them deliver "cultural change". |
The decision to drop the inquiry comes six months after FCA boss Martin Wheatley - who was originally hired because of his reputation as a tough regulator - was effectively sacked by Mr Osborne, after he was told his contract was not going to be renewed following two tumultuous years in the role. | The decision to drop the inquiry comes six months after FCA boss Martin Wheatley - who was originally hired because of his reputation as a tough regulator - was effectively sacked by Mr Osborne, after he was told his contract was not going to be renewed following two tumultuous years in the role. |
Many in the City found Mr Wheatley's approach too combative and raised concerns about some of the language he used in reference to the banking industry. | Many in the City found Mr Wheatley's approach too combative and raised concerns about some of the language he used in reference to the banking industry. |
Richard Lloyd, executive director of consumer watchdog Which? said he was also "disappointed" that the inquiry was being shelved. | Richard Lloyd, executive director of consumer watchdog Which? said he was also "disappointed" that the inquiry was being shelved. |
He added: "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." | He added: "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." |
Percival Stanion, head of multi-asset strategies at Pictet Asset Management, told the Today programme there was "definitely a shift in tone towards the banks". | Percival Stanion, head of multi-asset strategies at Pictet Asset Management, told the Today programme there was "definitely a shift in tone towards the banks". |
"Bankers are heaving a sigh of relief at the signal that the government is off their backs," he added. | "Bankers are heaving a sigh of relief at the signal that the government is off their backs," he added. |
He also suggested that it was "no coincidence" that the investigation was being dropped at a time when HSBC was reviewing whether to keep its headquarters in London. | He also suggested that it was "no coincidence" that the investigation was being dropped at a time when HSBC was reviewing whether to keep its headquarters in London. |
Analysis: Business correspondent, Simon Jack: | Analysis: Business correspondent, Simon Jack: |
This will be seen by many as further evidence that regulators and the government have decided to take a softer line with the banks and bring the "banker bashing" era to a close. | This will be seen by many as further evidence that regulators and the government have decided to take a softer line with the banks and bring the "banker bashing" era to a close. |
The government is keen the UK, and London in particular, doesn't lose its appeal as a place for global banks to do business and employ highly paid (and taxable) people. | The government is keen the UK, and London in particular, doesn't lose its appeal as a place for global banks to do business and employ highly paid (and taxable) people. |
There have been a series of moves perceived as bank friendly in the last year. Martin Wheatley, the former chief executive of the FCA and a fierce critic of the banks was eased out of his position earlier this year and is yet to be replaced. | There have been a series of moves perceived as bank friendly in the last year. Martin Wheatley, the former chief executive of the FCA and a fierce critic of the banks was eased out of his position earlier this year and is yet to be replaced. |
A time limit is being proposed on compensation claims for those mis-sold payment protection insurance (PPI) - a scandal that has seen the banks haemorrhage £25bn to date and the bank levy, a charge on UK banks worldwide assets was replaced with a less onerous charge on domestic profits. | A time limit is being proposed on compensation claims for those mis-sold payment protection insurance (PPI) - a scandal that has seen the banks haemorrhage £25bn to date and the bank levy, a charge on UK banks worldwide assets was replaced with a less onerous charge on domestic profits. |
HSBC has also been a vocal critic of the bank levy, which the Chancellor of the Exchequer, George Osborne, reduced in his Summer Budget following the general election. | HSBC has also been a vocal critic of the bank levy, which the Chancellor of the Exchequer, George Osborne, reduced in his Summer Budget following the general election. |
Mr Wheatley was succeeded by his deputy Tracey McDermott in September on an interim basis, but the chancellor has reportedly struggled since Mr Wheatley's departure to attract a new FCA chief, with at least one leading financial regulator said to have turned the job down. | Mr Wheatley was succeeded by his deputy Tracey McDermott in September on an interim basis, but the chancellor has reportedly struggled since Mr Wheatley's departure to attract a new FCA chief, with at least one leading financial regulator said to have turned the job down. |
In a statement, the FCA said a focus on the culture in financial services firms remained a priority. | In a statement, the FCA said a focus on the culture in financial services firms remained a priority. |
"There is currently extensive ongoing work in this area within firms and externally," it said. | "There is currently extensive ongoing work in this area within firms and externally," it said. |
"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." | "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." |