Opinion  

FCA and Treasury going soft on banks

Tony Hazell

Tony Hazell

I often listen to Radio 4’s Money Box programme on iPlayer a few days after its original broadcast.

So when I heard the acting chief executive of the Financial Conduct Authority recently suggesting that commission could play a part in sales I thought I’d made a mistake.

Perhaps I had inadvertently downloaded an old programme from April 1 last year. Maybe it was a discussion from a couple of years ago.

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But no. Here was Tracey McDermott saying: “I wouldn’t rule out that there may be some element of commission, but we are not going to reverse the Retail Distribution Review.”

Well, at least there is some relief in the second part of that statement.

In the same interview Ms McDermott denied that the FCA was going soft on the banks. Yet the very admission that the FCA is considering an element of commission suggests the opposite.

Despite denials and statements to the contrary it is very difficult not to believe that this complete volte face is being engineered from within the Treasury.

George Osborne wants us to love the banks in spite of the damage inflicted on our lives and savings by their reckless behaviour in the past.

Estimates of the cost of the banking crisis vary wildly. Let us just say they are immense, and then digest this comment on the subject from a National Audit Office report: “The income generated by fees and interest is less than would be expected from a normal market investment and has not compensated the taxpayer for the degree of risk accepted by taxpayers in providing the support.”

So basically we taxpayers were forced to take on an exceedingly risky investment with insufficient returns.

I accept that there comes a time when we must move on. We cannot keep harping back to old mistakes. But that can only be the case when the banking industry and the regulators accept that the culture within banks was toxic, major mistakes were made, and lessons must be learned and acted upon.

The recent decision to scrap a review into behaviour within banks coupled with this suggestion that some form of commission could be considered suggests that far from yearning for change the Treasury and the banks wish to sweep contentious issues under the carpet.

Commission was at the heart of nearly every mis-selling scandal from precipice bonds to endowments and from personal pensions to PPI.

For a regulator to suggest that it could return in any form suggests that either they have learned nothing from the past 25 years or they are being placed under unacceptable pressure by a government desperate to appease the banks.

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Some advisers don’t get it