UK draws line under ‘banker bashing’ after scrapping assessment

A review of Britain's banking culture has been ditched by the UK's financial watchdog only months after its launch, in the latest sign that the years of "banker bashing" are coming to an end.

The Financial Conduct Authority has abandoned its assessment of culture at retail and wholesale banks operating in the UK, saying each company is unique and cannot be easily compared, according to people familiar with the situation.

A logo sits on a sign in the reception area of the headquarters of the Financial Conduct Authority (FCA) in the Canary Wharf business district in London, U.K.
Chris Ratcliffe | Bloomberg via Getty Images
A logo sits on a sign in the reception area of the headquarters of the Financial Conduct Authority (FCA) in the Canary Wharf business district in London, U.K.

The move to scrap the review comes after Martin Wheatley, the watchdog's chief executive, was defenestrated 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.

Mark Garnier, a Conservative MP and member of the Treasury select committee, told the Financial Times that it was "disappointing" that the watchdog had stopped its review so early.

"I hope this is a delay rather than a cancellation because consumers need to know that an independent regulator is happy, overall, with bank standards," he said.

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Labour MP John Mann said it was "unacceptable" that the review has been dropped.

"As far as we know, the culture hasn't changed yet — that's very clear to people. Cultural problems were fundamental to the financial crisis and remain fundamental now. Lessons haven't been learnt," he said.

The watchdog's review was unveiled in its annual business plan this year and formed an integral part of its strategy laid out to parliament, business and consumers on how it would regulate financial services.

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.

The British Bankers' Association, an industry body, recently warned that banks in the UK should face internal consequences for failing to tackle the lack of diversity in the workplace to help end the sector's "pinstripes and braces" reputation.

An industry-wide board was created in the UK last year to promote "high standards" in the banking sector. Dame Colette Bowe, chair of the Banking Standards Board, has previously told the FT that "people have lost trust in banking" after a string of scandals.

She said this year that the board would be "looking at bank remuneration structures" and the "messages these send to their own workforces".

Mr Garnier added that the FCA's review could have "marked the homework" of the banking board to gauge its progress in raising standards.

The FCA said: "A focus on the culture in financial services firms remains a priority for the FCA. 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 as well as supporting the other initiatives outside the FCA."