MPs says Chancellor behind u-turn
Fingers point at Osborne after FCA ditches review of banks
George Osborne has been accused of caving in to pressure from City grandees following the regulator’s decision to drop a review into Britain’s banking culture.
The Financial Conduct Authority (FCA) today announced it will ditch the inquiry and instead “engage individually with firms to encourage their delivery of cultural change”.
But the move is being seen as a softening of its approach after several years of “banker bashing” following the 2007-2009 financial crisis.
MPs are questioning whether Mr Osborne was influential in the decision following contact with City bankers. He refused to renew the contract of FCA chief executive Martin Wheatley, a hardliner, who left in July.
Labour’s John Mann, who sits on the Treasury select committee, was today quoted saying: “George Osborne is behind it, without any question.
“The cultural issues are what lays at the heart of the financial crisis. It’s fundamental. Individuals took irrational risks with other people’s money. This decision leaves us hugely exposed into the future because it allows the banks to continue to act as they acted before.”
He added: “George Osborne is bowing to pressure from the banks. HSBC and Barclays have threatened to leave the country, that is what they are privately threatening.”
Conservative Mark Garnier, who also sits on the committee, said he was “disappointed” by the decision.
He told BBC Radio 4’s Today programme: “There has always been this great argument that perhaps the Treasury is having more influence over the regulator than perhaps it ought to and certainly, 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.”
Liberal Democrat leader Tim Farron said any hope of change had been “dashed”.
He said: “The public are rightly fed up with the banking sector marking its own homework and cutting out anyone with a critical eye. Any hope of change and progress has been dashed, with a very clear return to businesses as usual.
“Cosy decisions between the banks and politicians, and a toothless regulator, lead us to one of the biggest financial crashes in living memory. The high-risk players in the banks were left to gamble with public money, with little care for what may happen.
“When the banking sector faces trouble, British livelihoods are on the line. To do anything other than operate with complete transparency, and with proper checks and balances, will be reckless and will undermine public trust.”
David Hillman, spokesperson for the Robin Hood Tax campaign, said: “This is a slap in the face for ordinary people whose interests have once again been trumped in favour of the banks.
“The financial sector caused the largest crisis in a generation and we’ve had seven years of scandal since. It’s hard to think of a worse time to ease up on reform.
“Cosying up too close to the financial sector helped cause the last crash – the government must not make the same mistake again. It’s time to put the interests of the public above the special treatment given to banks.”