The current head of the Financial Conduct Authority has rejected allegations made by a senior MP that the watchdog has become too lenient with banks. The claims were made after the Financial Conduct Authority decided to axe its inquiry into the current culture in the banking sector in the City of London.
The acting head of the organisation, Tracy McDermott, has been in charge of the Financial Conduct Authority since Martin Wheatley left the post back in September. Ms McDermott has hit back at criticisms of the decision to cancel an inquiry into the conduct of various investment and retail banks.
Another inquiry, which was carried out to investigate whether or not the Swiss branch of HSBC was helping its clients to avoid tax, is now not expected to be published either
Ms McDermott, among other leading figures, has now been called upon by the Treasury select committee to present evidence to them later in January. Andrew Tyrie is the chairman of the Treasury select committee and he said that he believes that the decisions that have been made recently show a clear “weakening of resolve” from the City watchdog.
Ms McDermott recently revealed that she does not wish to continue in the role on a permanent basis. She spoke to the BBC to say that the regulating body had taken strong action against things such as foreign exchange trading and Libor.
“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,”
“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.”
Previously the business secretary, Liberal Democrat Member of Parliament Vince Cable said on Radio 4 Today ‘s BBC programme that he was starting to get a “bit suspicious” of the way in the which the watchdog was dealing with the banks that it is supposed to be regulating.
He commented saying:
“The reason for the suspicion is that shortly after the election, Martin Wheatley who was the head of this body Ö a tough bank regulator brought in from Hong Kong, it was made very clear he was shown the door. He was too tough, he was unpopular with the banks.”
Mr Cable went on to say that he was also worried about the about of financial products that the banks use in a commission-based manner. One example of this was PPI (payment protection insurance), which was then revealed to have been mis-sold on a huge scale.
“I think that would trouble members of the public because there ‘s no reason for that.”
He went on to say that he has long felt that ministers are put under a lot of pressure from the banks in the City, to not “destroy the industry” by being too firm with regulation.
“There ‘s a deeply held belief in the City, totally sincere and there ‘s a basis for it, that the financial service industry is important to the UK. It ‘s an important export industry, it generates a lot of revenue and it sometimes follows on from that that politicians should give them much more breathing space than I think is justified by recent history,” he said.
“The public need reassurance that the banks are under careful scrutiny and when there are abuses known to be taking place these should be made public.”
One of the Conservative MPs who sits on the Treasury select committee, Chris Philip, commented saying that he did not think that the decision to cancel the Financial Conduct Authority ‘s inquiry had been taken due to pressure from the conservative government but that the watchdog ‘s decision was deeply worrying for him.
He spoke to the BBC to say:
“I actually am worried because Tracey McDermott herself said in July there was still a systematic problem with the culture in banks.”
“We ‘re going to get her and chairman of the FCA to appear before the Treasury select committee in a few days ‘ time, I ‘ll be asking some tough questions because I am personally concerned about the dropping of that inquiry.”