FSA head of enforcement Tracey McDermott has admitted it is easier to go after the “little guy” rather than take on the big banks.
Speaking to the Parliamentary Commission on Banking Standards yesterday, McDermott rejected suggestions that the FSA lacks integrity and is too close to the banks.
PCBS chair Andrew Tyrie asked McDermott whether it is easier for the FSA to go after the “little guys” and McDermott replied: “I would accept it is easier”.
Tyrie slammed the regulator for letting “the big fish swim straight past” FSA rules and acting as a “toothless tiger”. Labour peer Lord John McFall hit out at the regulator for not taking on senior bankers.
McFall said: “You as an organisation have failed to tackle those at the top. You are playing at a middle level and groping around at trying to hold people to account.
“It needs some dramatic statement from the FSA saying ‘we have been missing in the past and captured by the banks and we will do something to demonstrate our independence’. I suggest that the integrity of the FSA has been lacking over PPI or holding people to account.”
McDermott said the FSA has attempted to hold senior staff to account but has been unable to do enough under its rules.
She said: “We have taken action against senior individuals at large firms. It is a relatively small number even though we have worked quite hard. We often find we start asking questions and no one can tell us who is in charge.”
McDermott said there are three obstacles to taking on senior bankers, including the fact that many decisions are made by a committee so finding responsibility can be “difficult”, complex structures mean it is difficult to find out who is in charge and FSA rules mean there is a high evidence threshold to punish individuals.