FCA ‘to drop two more inquiries’ after scrapping bank review

The City watchdog has ditched two more inquiries into the financial services industry amid the scrapping of its review into the sector’s culture.

The Financial Conduct Authority (FCA) sparked controversy when it was revealed on New Year’s Eve that it is to abandon its review into the culture of the UK’s banking industry, instead holding individual talks with banks about concerns.

It was alleged – and denied by the Treasury – that it was due to pressure from Chancellor George Osborne, who is seen as having adopted a more emollient atitude towards the banks since the Conservatives won last year’s election.

The FCA has now reportedly also closed a study into the way banks incentivise their staff to sell financial products, and is about to shelve an inquiry into how insurance companies use customer information.

The moves follow the enforced departure last summer of Martin Wheatley, the former FCA chief executive said to have irked Osborne for being too heavy-handed with the City and after the regulator botched an announcement of a review into life insurance products via a media interview in 2014.

Critics have claimed the FCA’s softened approach has let banks off the hook following a string of scandals including Libor and forex market manipulation.

However, the government is also worried by the confirmation by Stuart Wheeler, chief executive of HSBC, that the banking giant was thinking of moving its group HQ from the UK because of the weight of regulatory compliance.