Britain’s Banking Regulator Scraps Public Review Of Banks
The UK’s financial regulator the Financial Conduct Authority (FCA) recently announced that it is cancelling its planned public review of Britain’s banking culture. The FCA stated on the 31st of December 2015 that it decided to change its earlier strategy and will now work individually with UK banks to address and handle all concerns.
The 2007-2009 financial crisis prompted the regulator to keep banks under close scrutiny and take an uncompromising stand, which caused the FCA to gain a reputation for its “banker-bashing.” However, in a series of recent moves, the FCA appears to be relaxing its stance on UK banking regulations.
Earlier this year the FCA decided to ease rules that hold senior bankers accountable for regulatory breaches and in July 2015 the FCA’s Chief Executive Martin Wheatley who was considered a hardliner tendered his resignation.
The public sentiment towards banks still remains hostile in the light of multiple banking scandals like the recent market-rigging of currency rates and interest rate benchmarks, for which Barclays and HSBC have been fined heavily. The public review of banking culture was announced in its aftermath in March.
Financial analysts in the UK stated that although initial work on the review was carried out, the FCA subsequently decided that it was not the best way to handle the issue. I The proposed review was intended to examine and compare cultural practices and behaviour within banks across industry. Now the FCA has instead opted to work directly with the banks in question and address any issues related to corporate culture and policies.
In a statement, the FCA said,
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.
The scrapping of the review has evoked widespread criticism. Senior opposition politicians have commented that an opportunity to identify the good and the bad in the current banking culture of Britain was being lost by this decision. One of those senior politicians felt that the move to back out all of a sudden was nothing but ‘surrender to the big banks’. Industry experts have termed it a disappointing move as main causes for scandals and the financial crisis are yet to be identified and cultural malpractices within the banking system are yet to be addressed.
The FCA has previously asked the banks to learn lessons from the recent scandals and a number of banks in the UK have already indicated changes in their operations.