Conservative and Labour MPs blame Chancellor George Osborne for forcing the Financial Conduct Authority’s general inquiry into banking culture. The watchdog’s probe will gather information that would help it analyse and detect any bank behaviour that could lead to a possible mis-sold PPI-like incident.
The UK Treasury denied that Osborne stopped the FCA’s probe. A spokesman said that Osborne has no influence and it would be ridiculous for the Chancellor to have any influence over the FCA.
Osborne is accused of having ‘cosy chats’ with top bank officials. Government records indicate Osborne has had 87 lunch and dinner meetings with leaders from different banks and financial institutions including Goldman Sachs, UBS, Lloyds, Royal Bank of Scotland and Deutsche Bank.
The FCA’s inquiry would try to see if employee pay, promotion and incentives played a role in the Libor and PPI mis-selling scandals. In the last few years, banks have changed their incentives system to encourage employees to consider consumer usefulness before volumes of sales. However, not all banks adopted the new incentives system.
Conservative MP Mark Garnier of the Commons Treasury Select Committee said Osborne placed pressure on the FCA through his department. Meanwhile Labour MP John Mann said that Osborne allowed the banks to continue and repeat their actions as before.