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Hector Sants urges Govt to strip FCA fining powers

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A review of Britain’s banking industry by former FSA chief executive Sir Hector Sants has called for the regulator to be stripped of its power to set penalties and redress for misconduct.

The recommendation is one of 23 made by Sants, who headed up the financial watchdog from 2007 to 2012, in a report on UK banking competitiveness published by the British Bankers Association. Sants now works for consultants Oliver Wyman.

The report says the Government should consider establishing “a new independent body responsible for penalty and redress decision-making” outside the FCA.

Sants also suggests policymakers examine the case for increasing operational separation of the FCA’s supervision and enforcement divisions.

The report says: “The current remit of regulators covers supervision, penalty and redress.

“This can distort incentives and create the potential for regulatory moral hazard and political influence.

“Many contributors believed that an independent body responsible for redress would result in better outcomes, not only for banks but also for their customers in ensuring rigorous alignment alignment of redress amounts with the cost of the misdeed.”

The report also warns the existing rules “place a disproportionately large burden on smaller banks that are less able to absorb the cost of the increasing complexity of the regulatory environment”.

The recommendations comes after a series of huge fines issued by the regulator to major banks in recent years, primarily in relation to Libor fixing and payment protection insurance misselling.

Lloyds Banking Group was clobbered with a £117m penalty for failing to handle PPI complaints fairly in June, while Barclays, Deutsche Bank and Clydesdale Bank have also been hit with huge fines in 2015.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. The report says the Government should consider establishing “a new independent body responsible for penalty and redress decision-making” outside the FCA, so more city fattest can join the gravy train we have to fund!!

  2. How odd that he never thought of this when he was at the regulator.

    Can he really be so naive / arrogant / dumb (delete as you feel appropriate) to believe that there is anyone in the land who won’t see this for the naked self-interest that it so clearly is?

  3. No ..you can’t have your old job back…. go away!

  4. Would he be angling for another highly paid unaccountable job? Personally I think the fines should be imposed by FSCS as ultimately it’s their decision that stands when providing compensation to consumers. It might even help bring down the levy.

  5. No he just paying lip service to his masters at the treasury. Someone said to me when he was asked to stay on at the FSA He knew where the skeletons were. Despite what we all think of him he plays the power game well and appears to be winning.

  6. His arrogance and hypocrisy seem to have no limits!

  7. Conflict of interest glaringly bright. If that’s representative of the overall report, it’s been a waste of money and effort. However, you’d expect the Bankers Assoc to give it a try so can’t blame them for that.

    Just hope everyone’s alert in not granting their wish.

  8. This from the man who said we should “Be afraid – be very afraid” of him when he was the regulator. Gamekeeper turned poacher. Hilarious!!!

  9. Trevor Harrington 13th November 2015 at 10:04 am

    Hector’s house ?

  10. Can I make a suggestion; reading between the lines is this open statement or list of recommendations, is a veiled attempt to win back favour within the banking community ?

    We have evidence that the RDR completely killed banking advice (which IMHO, Hectors plan was for it to increase banking advice and market share) Also he failed to contain (be able to hide) the extent of disasters that banks were having, which led to the huge fines, for which he had no control over any more, Barclays must have been giving him a real hard time that he had to go on sick leave, the banking community from top to bottom must hate him more than we do !

    Now he is bouncing around the fringes in exile in crappy consulting roles; his Elba if you will !

  11. Does this rather strange and surprising proposal from Mr Sants relate solely to the FCA’s powers over the banks or would it apply to its powers over all FCA-regulated entities? It has to be the latter, otherwise the playing field would be skewed even further than it already is.

    I cannot help but think that a better approach, instead of removing and reallocating to a separate body (at yet more cost) certain of the FCA’s powers, would be to give the TSC the powers it clearly needs to supervise and regulate the activities of the FCA on a wide range of issues, with real powers of enforcement and redress and/or fines for failures to comply. One thing of which the FCA should be stripped is its licence to award huge pay-offs for employees forced to resign as a result of acknowledged failures in the discharge of their responsibilities.

    The basis of such powers should be the Statutory Code of Practice for Regulators (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/300126/14-705-regulators-code.pdf). Therein lies the framework of how the FCA (like all other regulatory bodies) is supposed to conduct itself and treat those it regulates. For example:-

    “Regulators should avoid imposing unnecessary regulatory burdens through their regulatory activities and should assess whether similar social, environmental and economic outcomes could be achieved by less burdensome means. Regulators should choose proportionate approaches to those they regulate, based on relevant factors including, for example, business size and capacity.”

    Why is no one seeking to address the FCA’s unilateral opt out from the Code?

  12. Get someone in who has steel balls and the will to unravel the complete mess that Victor and his cronies have created over the last 10 years. There are sooooo many quality people now not working in FS tgat would willing come back and in turn bring back hundreds of thousands of clients that have been lost …….. and before any smart comments about their lack of knowledge is dealt out and the industry is a better place without these advisors start I would ask you to take a few deep breaths and consider where we were before RDR and where we are now. Oh, and try to think of the clients that now don’t receive any advice at all …. and not yourselves!

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