The Financial Conduct Authority appears to be dropping plans to carry out an inquiry into the culture, pay and behaviour of staff in banking.
Here is a selection of interesting commentary developing around this story:
"A spokesperson for the FCA declined to confirm it was scrapping the report but gave us this statement:
A focus on the culture in financial services firms remains a priority for the FCA. There is currently extensive ongoing work in this area within firms and externally. We have decided that the best way to support these efforts is to engage individually with firms to encourage their delivery of cultural change as well as supporting the other initiatives outside the FCA."
Mark Garnier MP, a Conservative member of the Treasury Select Committee told the BBC he was "disappointed" by the decision, saying "probably, we're missing an opportunity to be able to look at what is best and worst practice across the banks."
He added: "There's always been this great argument that perhaps the Treasury is having more influence over the regulator than perhaps it ought to. And certainly if I was looking for a Machiavellian plot behind what's happened here and the tone of the regulator then I suppose I would start looking at the Treasury.
Labour MP John Mann said it was “unacceptable” that the review has been dropped.
“As far as we know, the culture hasn’t changed yet — that’s very clear to people. Cultural problems were fundamental to the financial crisis and remain fundamental now. Lessons haven’t been learnt,” he said.
A source close to the FCA told Business Insider that the regulator has done its initial round of the inquiry but has instead decided to proceed in its inquiry by working with the banks “individually,” directly, to address”remuneration, appraisal and promotion decisions” and will not be publishing a report like it usually does.
The source said it isn’t abandoning the inquiry, just that it is doing it in a different way than what is usually assumed from a thematic review.
"This will be seen by many as further evidence that regulators and the government have decided to take a softer line with the banks and bring the "banker bashing" era to a close.
The government is keen the UK, and London in particular, doesn't lose its appeal as a place for global banks to do business and employ highly paid (and taxable) people."
The FCA insisted the Treasury had played no part in ending the review. “Having undertaken an initial piece of scoping work, we decided that a traditional thematic review would not help us achieve our desired outcomes and we would therefore take forward our work on culture through other routes. This was an FCA decision. [The Treasury] were not involved,” it said.
The Treasury denied involvement and said it was not backtracking on banking reform after making changes to the way senior bankers are held to account and altering the tax regime to pacify HSBC, which is reviewing whether or not to keep its headquarters in the UK.
Richard Lloyd, the executive director of Which? said: “It’s disappointing that the regulator has decided against publishing this report on the culture of banking. Cultural change doesn’t happen overnight, so despite signs of improvement, the FCA must not take their eye off the ball and should continue to clean up the industry.”