Bankers warned: repent or go to jail
Monday, 1 October 2012
Britain's new chief financial policeman has issued a stark message to the City of London: "We have barely got started" ... Martin Wheatley, the head of the new Financial Conduct Authority, warned that people who believe watchdogs are already too tough have "a big wake-up call coming". Accusing bankers of avoiding responsibility for misconduct by hiding behind committee management, he raised the prospect of US-style prosecutions of senior executives: "In the future we want individuals held to account."
The FCA, which will replace the Financial Services Authority, will have the power to launch raids on City offices and bring criminal prosecutions. Mr Wheatley... who last week recommended that bankers who attempt to manipulate Libor face criminal prosecution, pledged to investigate and expose potential abuses in other sectors of the financial-services industry. That could include the gold and silver markets, oil, foreign exchange and even agricultural commodities. "We will shine a light into a number of dark corners and we will have to take action depending on what we find," Mr Wheatley said.
The regulator also accused banks of mistreating their customers to an extent that would be unimaginable in other consumer businesses... Mr Wheatley published his report into Libor interest rates on Friday which called for sweeping changes to the way they are calculated in the wake of attempts by traders at Barclays and other banks to fix them. He said the roots of this and a string of other financial scandals came from "a deep, dark period" between 2005 and 2008.
"That was a horror period in terms of the way people were abused in their financial services. A lot of the things we are dealing with today – Libor, payment-protection insurance, interest-rates swaps – all of them go back to that period."
... This follows widespread public fury about the fact that no senior bankers have been prosecuted over the financial crisis and only two of the top bankers from the failed banks HBOS and Royal Bank of Scotland (RBS) were banned by the regulator: Johnny Cameron, from RBS, and Peter Cummings, from HBOS, who was also recently fined £500,000.
"If there are failures in the future we want individuals held to account," Mr Wheatley said, admitting that fining companies didn't work. "Ultimately the shareholders pay and it gets written off."
He will change this by forcing banks to assign personal responsibility for various functions to individual bankers. Mr Wheatley said one of the chief reasons regulators have been prevented from acting in the past is because decisions are often taken by committee in banks, making it hard to assign blame.
"Society wants us not just to be ticking boxes, asking if people have been following the rules, but to be looking at outcomes and at what's going wrong and then taking action. That's what I've been brought in to do and that's what I will do."
This man has a tough job. Let's get behind him with our thoughts and prayers that every nest of corruption will be found within the current banking and financial system. Wheatley and his team are up against giants...