The chairman of the Treasury select committee has said the new Financial Conduct Authority chief executive must address the regulator’s communications strategy.
Yesterday (20 January) members of the committee took evidence from top FCA bosses, John Griffiths-Jones and Tracey McDermott, over the decision to drop the review into the culture at retail and wholesale banks.
In a statement released after the hearing, committee chairman Andrew Tyrie said: “The FCA appears to suggest that there was not a lot wrong with the handling of the cancellation of their thematic review in to the culture of banking.
“It certainly didn’t look that way, either at the time or during the hearing.”
Mr Tyrie stated the way the regulator quietly dropped the banking review just before New Year’s Eve reflects wider problems with the FCA’s effectiveness, and with its communications strategy, which the new chief executive will need to address as a high priority.
“The FCA has a difficult job, and problems like these won’t make his or her job any easier for the new incumbent.”
The Treasury select committee published all of the documents sent by the FCA, following a request for leaked documents seen by FTAdviser’s parent publication, the Financial Times, and other relevant documents relating to the decision to continue the thematic review into the culture in banks.
On 13 January, Mr Tyrie demanded documents from acting FCA chief executive Ms McDermott, which were referred to in the FT article.
The documents suggest a Bank of England official oversaw the FCA’s decision not to continue the thematic review into the culture in banks, and any other relevant documents.
A decision paper states that the rationale around the FCA’s thematic work on culture, which is part of the watchdog’s 2015 to 2016 business plan, has opted for a change of approach.
The document reads: “This should be communicated externally with a primary message that the FCA continues to prioritise the importance of good firm culture.”
However, during yesterday’s committee hearing, the FCA was attacked on its failure to publicly announce that it had shifted its focus away from a thematic review of the entire banking sector, and instead onto the supervision of individual firms.
Commenting on yesterday’s news, Simon Morris, partner at law firm CMS, said: “An effective regulator needs to command respect, especially when light is shone on its innermost workings.”
He said it is surprising the FCA doesn’t seem to have learned the lesson of effective decision-making from its 2014 press briefing debacle, in which the FCA subsequently published a report.
“One of the new chief executive’s first jobs will be to make sure that when the FCA takes a decision, it only does so once, and gets it right first time.”