Jump to content
House Price Crash Forum

Bad Bankers Warned: Repent Or Go To Jail

Recommended Posts

Britain's new chief financial policeman has issued a stark message to the City of London: "We have barely got started."

In an exclusive interview with The Independent, 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, pictured, 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.

"The truth is that if our supermarkets in this country, if John Lewis, operated in a way that banks do, they wouldn't have any customers," he said. "If companies were operating in a way that was thinking about the long-term interests of their customers then you wouldn't need a heavy-handed financial regulation."

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."

He attacked a mindset among banks that held that "you had to sell, you had to be earning by whatever means necessary" and pledged to force them to change their behaviour if they won't act themselves.

In addition to forcing changes to the way bankers are paid, Mr Wheatley also detailed how leaders will be held to account if banks fail in future.

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."

He added: "Part of the industry appears to feel that it can abuse customer relationships time and time again without taking any impact from it."

Mr Wheatley gained a reputation as a hardliner in Hong Kong which has followed him to London and can be seen in last Friday's report into how to reform Libor interest rates, in which he had some hard words for the banking industry.


I don't want them to repent, I want them to go to jail.

Link to comment
Share on other sites

We could get rid of most regulation by making the senior executives liable for the costs of any successful prosecution for malpractice or the costs of any bailout.

If the people in control were likely to lose their own money and homes I think we would see a sudden surge of interest in making sure that nothing dodgy was going on. Instead of 'rogue traders' getting a nod and a wink from supervisors they would be rooted out and shut down immediately.

How strange that an industry so concerned with the issue of incentives should have failed to incentivise ethical behaviour- a cynical person might suspect that they chose not to because there was more profit to be gained by doing the opposite.

Link to comment
Share on other sites

How strange that an industry so concerned with the issue of incentives should have failed to incentivise ethical behaviour- a cynical person might suspect that they chose not to because there was more profit to be gained by doing the opposite.

Spot on. And incentivisation comes from the central authority.

As for Whealey's approach to past abuses, see this on interest rate swaps for small businesses:


Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Recently Browsing   0 members

    • No registered users viewing this page.

  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.