Financial services middle management risks falling into a regulatory “blind spot”, Martin Wheatley has said warned.
The FCA’s chief executive has said there has been too little debate about the thousands of employees who are often responsible for selling to the public.
In a speech at independent think-tank ResPublica in London last week he said: “It’s an imperative that leadership responsibility at the top isn’t taken to imply a lack of responsibility for change in the middle.
“Bank boards are no more able to reform cultures on their own than star riders are able to win cycling tours without pelotons and domestiques. You could argue that those at the centre of organisational pyramids should, by the law of averages, influence greater numbers of colleagues on a personal, day-to-day basis than a clutch of senior leaders.”
Mr Wheatley said he did not think middle managers in banking were fundamentally different to those in other industries. But he warned the “environment they operate within creates a greater test of moral resolve”.
Mr Wheatley expressed his frustration at the difficulty of establishing “the most basic line-management relationships” because of “corporate filibustering”. He spoke of one instance in which the FCA went after a rogue trader and was told the firm did not know who its line manager was.
After investigating, the FCA identified four potential managers who came to them with a “battery of lawyers” each to prove they were not the manager.
But he added that he would not spell out how a particular individual could avoid action from the FCA under the new accountability regime.
He said: “For lawyers, the slightly unsatisfactory answer here, but the honest one, is that it is difficult for policymakers to be prescriptive about the steps that a particular individual is expected to take.”
However, Alison Cottrell, chief executive at the Banking Standards Board, said rebuilding trust would not be an “easy fix”.
She said: “This is not about getting clients to trust their banks more: it is about making banks more trustworthy, and that is something beyond regulation.”
Clive Balchin, managing director at Lancashire-based James Trickett & Sons, said: “I have been in the job for 25 years now and it has changed beyond all recognition and has gone from being one where you sell products to one where you sell advice and time.
“We suffer from regulatory over-creep, and people are so interested in the process they have forgotten what we set out to achieve.”