Financial regulator denies ‘going soft’ on the banks – BBC News

The acting head of the Financial Conduct Authority has denied her organisation is ‘going soft’ on banks.

The interim chief executive of the Financial Conduct Authority has defended her record in regulating the banking sector.

Tracey McDermott took over the role after Martin Wheatley left the organisation in September.

Critics say the Treasury has successfully put pressure on the regulator to be more ‘light touch’ in its treatment of financial firms.

But Ms McDermott says the FCA takes a tough stance against the industry.

Hard stance

Speaking to the BBC she said: “We’re not going soft on the banks, we’re not being told what to do by the government. We have objectives which are set for us by parliament and statute, and we are determined to deliver on those.”

Ms McDermott gave examples of the regulator’s action on Libor and Foreign Exchange Trading, and said the FCA had imposed a £72m on Barclays in December over poor handling of financial crime risks.

“If you look at what I’ve been doing in the last six months since I’ve been in the role as chief executive you’ll see that we have continued to take action against the industry,” she said.

However, critics have pointed to other recent decisions by the FCA which they say show it is taking a lighter touch to regulation.

Emerging patterns

Peter Hamilton is a barrister whose cases involve the financial services market and FCA regulation.

He believes the FCA has softened its stance since Martin Wheatley was forced to step down: “Let’s look at the evidence.

“The abandonment by the FCA of its review of banks’ culture and ethos. The decision not to take action against HSBC in respect to its Swiss subsidiary.”

Other critics have highlighted the decision not to publish a report on how firms offer inducements to some staff to encourage them to make sales.

The FCA decision to consult on whether to impose a time limit beyond which customers could not longer put in a Payment Protection Insurance claim has also attracted criticism, along with a move to set up an expert panel to consider whether to allow commission-based selling of investment products again.

The FCA said a focus on the culture in financial services firms remained a priority: “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.”

Balancing act

Ms McDermott pulled out of the race to run the City watchdog.

She said she withdrew from the recruitment process to become the permanent chief executive for personal reasons and she has not decided whether to stay on at the regulator when her successor is appointed.

Mark Garnier MP, a Conservative member of the Treasury Select Committee, said the new FCA chief will have to both protect consumers and keep good relations with the banks:

“It’s a very difficult tight rope to walk. The next chief executive may feel that they have to do what they think is the will of the Treasury.

“We have to make sure we don’t create an impossible environment for the new chief executive who will go into a job which they will be set to fail at,” he said.

Source: Financial regulator denies ‘going soft’ on the banks – BBC News

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