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FSA hits out at Barclays’ culture of gaming the regulator

Lord Adair Turner TSC

The FSA has singled out Barclays for a culture of “gaming” the regulator and pushing the limits of the rules.

Speaking to the Treasury select committee on Monday, FSA head of the prudential business unit Andrew Bailey said Barclays is an “outlier” compared with other banks and has to change.

Bailey confirmed that he had “read the riot act” to the Barclays board during an annual review of the bank in February.

The review was followed by a letter from FSA chairman Lord Turner to Barclays chairman Marcus Agius emphasising concerns over the bank’s culture.

Bailey told MPs: “The sort of words we would frequently use were that there was a culture of gaming and gaming us.”

Turner said: “We had a set of concerns about attitude to risk, a tendency to push the limits of approaches to particular issues and those had come in particular in the areas where Bob Diamond was involved.”

Earlier this month, Diamond told the TSC that the regulator had not lost confidence in the bank and, while issues always arise during its annual review, the FSA was pleased with the tone at the top of the bank.

But Bailey said Diamond’s evidence about the FSA’s annual review was “highly selective” while Turner said he was surprised at aspects of it.

Bailey said: “It does not capture the severity of the message we were making.”

Last week, Agius told the committee that the FSA said the corporate governance at the bank was “best in class”.

Ample Financial Services director Colin Parkin says: “It is a sad state of affairs that a big and respected organisation has to use these kinds of methods when it could perfectly and legitimately work within the rules.”

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