FCA hits back at Govt interference claims

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The FCA has dismissed claims its independence from Government has been compromised and defends its approach to the scrapped review into banking culture.

Both the regulator and Government have come under fire following the decision to close the inquiry into bank culture in favour of dealing with firms individually.

But at a Treasury committee meeting today, FCA chairman John Griffith-Jones flatly denied claims the regulator was lent on to drop the probe.

When asked by chairman Andrew Tyrie whether independence had been compromised or if specific decisions had been called into question he said: “The answer is no to both. In general I don’t feel pressure and certainly on specific operational decisions – particulary enforcement – clearly not.”

Griffith-Jones and acting chief executive Tracey McDermott also defended the handling around the communication of the decision to close the inquiry.

In December 2014 the Davis Review criticised the response to a botched media briefing that sent insurers’ share prices tumbling.

But McDermott said the decision to drop the review was not market sensitive.

She said: “There was nothing secret about the decision to drop the review. We communicated with the banks, with our panels and with one of your colleagues [Mark Garnier MP], the Banking Standards Board, British Bankers Association, there was nothing secret about it it was simply an operational decision.”

She added: “I do not believe there is any market sensitivity that the review is being scrapped. I don’t think there’s been any market reaction. In terms of public interest, clearly because of the amount of attention to this over the last couple of weeks it would be difficult to say there was not a public interest. That’s why we will need to consider whether or not wecommunicate differently.”

McDermott stressed dropping the inquiry did not mean the regulator was changing its approach to improving banking culture.

Griffith-Jones added chief executive terms should be increased from three to five years. Former chief executive Martin Wheatley was ousted by the Chancellor at end of his term in September last year.

Griffith-Jones admitted morale was down at the regulator following Wheatley’s departure. An independent review into the FCA board published last week said staff were affected by public criticism.