In the past few days one or two IFAs I have spoken to have expressed disquiet at the recruitment by HSBC of the recently-departed Financial Ombudsman Service chief executive Natalie Ceeney.
Ceeney, according to Money Marketing, will become head of the bank’s customer standards, responsible for “improving customer service and complaint handling”, as well as “developing the bank’s approach to conduct risk.
The concern seems to be over Ceeney’s transformation from gamekeeper to poacher. Actually, she follows in a long and proud tradition of former regulators opting for megabucks by moving to the private sector.
Financial services companies have been recruiting senior public sector figures for many years, including former PIA chief executive Colette Bowe who stepped smoothly into the executive chairman’s position at Fleming Fund Management after the FSA took over the role of her own regulatory organisation.
More recently, there is former FSA chief executive Hector Sants, who was snapped up by Barclays Bank in December 2012 to become its head of compliance and government and regulatory relations.
Barely one year later, Sir Hector – as he has now become after being ennobled in the 2013 New Year’s Honour’s list – resigned because of “stress and exhaustion” after being on sick leave for over a month.
Then there is Christina Sinclair, who also changed sides after 18 years at the FSA and the FCA, where she had been acting director of retail. Sinclair is now the Barclays’ global head of compliance for wealth and investment management.
Let’s not forget Margaret Cole, who swapped her job as FSA managing director for a nice little earner as legal counsel and board member at PricewaterhouseCoopers.
Others using their regulatory inside knowledge include Jon Pain, former FSA head of supervision, who left to become a partner at KPMG after being snubbed for the FSA’s top job when Hector – sorry, Sir Hector – Sants decided he would not be resigning after all in 2010. Pain is now head of conduct and regulatory affairs at RBS.
More minor figures to jump ship have included Katharine Leaman, manager of the FSA’s professional standards team, who has now been at RBS since 2011. There are plenty more like her.
Some advisers, like my old pal and fellow Money Marketing columnist Robert Reid, feel this transfer of expertise between regulators and the financial services sector shouldn’t be allowed.
Robert has commented: “We clearly need rules that state no regulator can work for a regulated firm for two years, at that point she would be hired on ability not recent locus.”
I must respectfully disagree with Rob on this one. If there were a genuine possibility that these people could use their experience and knowledge gained at the FSA or similar bodies to promote more rigorous standards of compliance and customer service, I would be all in favour of these moves.
My worry is that what can sometimes happen is these former regulators unwittingly become, at best, an inadequate sticking plaster used to cover some fairly unsavoury practices by the industry.
At worst, they are fig leaves, there to show the rest of the world that the institution recruiting them is keen on reforming itself. In fact, everything continues as before.
Take, for example, the case of Christine Farnish, a director of the FSA’s consumer division prior before decamping to the National Association of Pension Funds in 2002.
In July 2006, Farnish was recruited to become Barclays’ public policy director. At the time, Farnish was quoted as saying that she was “very excited” about joining at a time when the bank faced “the challenges of continuing to delight customers against a backdrop of increasing regulation and stakeholder pressure around the globe.”
A year later, Amanda Egbujo, an undercover reporter at the BBC, went to work at one of Barclays’ call centres in Sunderland. While there, Egbujo witnessed an extensive series of misselling malpractices from call centre staff.
This behaviour was encouraged by managers there, who told Egbujo that Barclays “was a business and we are here to make money”.
Barclays trainers – the very people who should have been teaching Egbujo and her colleagues about ethical standards of customer service – told her they “loved it” when customers complained about the extortionate cost of bank charges.
When the BBC broadcast Egbujo’s revelations on TV, Barclays wheeled out Farnish to tell viewers that, contrary to what they had just seen, “we are not in the business of encouraging or condoning inappropriate sales in any way whatsoever.”
What had happened was “not in any way representative of the way in which Barclays does business”.
Clearly, Farnish had no idea of Barclays’ long-running involvement in PPI sales at the time, where the cost of redress has now reached £4bn; nor the interest rate derivatives scandal where thousands of small firms – including pub owners, haulage firms, care-home operators and vets – were missold “hedging” insurance.
Then here is the continuing Libor fixing scandal, where interest rates were manipulated by Barclays traders, among others.
Farnish left Barclays after five years of “delighting” her customers there. One can only hope Ceeney does not cause similar raptures of joy from consumers in her time at HSBC.
Nic Cicutti can be contacted at firstname.lastname@example.org