A review into Britain’s banking culture in the wake of the Libor rate-rigging scandal has been dropped. The Financial Conduct Authority [FCA[ said it had decided instead to “engage individually with firms to encourage their delivery of cultural change”. This means a return to 'take the chap out to lunch to give him a stiff talking too'.
Earlier this year, the FCA told banks to sharpen up their efforts to learn lessons from scandals such as foreign exchange and Libor rate-rigging, which have already cost them billions of pounds in fines. They also often lacked the urgency required given the severity of recent failings, the watchdog said. So what has changed?
The move to scrap the review comes after Martin Wheatley, the watchdog's chief executive, was also dropped by the Treasury in the summer and reflects a more positive tone towards the City of London following the Conservative party's election victory. Banking culture has come under fire since the financial crisis over foreign exchange and Libor rate-rigging scandals that have led to multibillion pound fines. Mis-selling to consumers has also cost the banks, with payment protection insurance alone forcing them to earmark more than £26bn for claims.
The review was intended to determine whether programmes to shift culture in retail and wholesale banks were "driving the right behaviour". It focused on a range of issues such as bankers' pay, appraisal and promotion decisions of middle management, and how concerns were dealt with. However, the Conservatives seem to have reverted to their old ways of looking after the chaps with a series of private meetings that have no public scrutiny. The acting head of the FCA Tracey McDermott will be called before the Treasury Select Committee next week to answer why the review has been dropped. We are not expecting much from this as all the pals will stick together.