- Review was key proposal of former FCA chief Martin Wheatley
- FCA will instead engage banks individually to achieve change
A U.K. regulator dropped a review of banking culture, signaling that the Financial Conduct Authority is continuing to shelve projects initiated by former Chief Executive Officer Martin Wheatley.
The FCA said on Thursday that it won’t deliver the overarching report on the industry and will instead work with banks on an individual basis.
“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 London-based regulator said in a statement.
The review of banking culture was a priority of Wheatley, who was forced out by Chancellor of the Exchequer George Osborne earlier this year. Osborne had said that the regulator needed to move beyond a period of “banker bashing” that followed the financial crisis in 2008.
The Treasury is reviewing candidates to replace Wheatley, including interim CEO Tracey McDermott. The Financial Times reported earlier that the review had been dropped.
The FCA decision was criticized by opposition Labour Party lawmakers, who pointed the blame at the chancellor.
Osborne “cannot stay silent on this issue. It’s time he used his influence to keep this review going,” Labour’s Treasury spokesman, John McDonnell, said in an e-mailed statement. “Given the scale and severity of the failings in the financial sector and the criminal behavior shown by some banks, the scrapping of the FCA’s review into banking culture sends the wrong message at the wrong time.”
Even members of Osborne’s own Conservative Party were skeptical of the FCA move, with one member of Parliament’s Treasury Committee saying he was “disappointed.”
“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,” Mark Garnier said on BBC Radio’s “Today” program.
The Treasury said the FCA is responsible for “ensuring that the top management of banks instill the right culture” at financial institutions and that the government had no role in the decision to drop the regulatory review.
“The government has been absolutely clear that the integrity of the City matters to the economy of Britain, which is why we have taken action to improve conduct across the banking sector and deal with the abuses and unacceptable behavior of the past,” the Treasury said in a statement.
Many in financial services have complained about the excessive amount of new regulation since the 2008 financial crisis, as both the U.K. and the European Union have attempted to avert a repeat of the risk-taking that precipitated the crash. Their woes have been compounded by attempts to also hold more individuals to account in the wake of scandals such as rigging the benchmark Libor rate and manipulation in the currency markets.