UK Politics

Osborne should face questions into shelved bank probe says MP

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Media captionMP: Government to blame for banking culture inquiry axe

George Osborne should face questions from MPs as part of an inquiry into why a probe into the culture of banks was abandoned, Labour's John Mann has said.

The Treasury Select Committee is to question executives from the Financial Conduct Authority about their decision to drop a probe into pay and standards.

The chancellor says he had no knowledge of the "independent" decision.

But Mr Mann, a committee member, said this was a "bit weaselly", suggesting the FCA had been "told what to do".

The FCA had planned to look at whether pay, promotion or other incentives had contributed to scandals involving banks in the UK and abroad.

But, at the end of December, it said it had decided a "traditional thematic review" would not help it achieve its "desired outcomes", promising instead to encourage the "delivery of cultural change".

'Interference'

The cross-party committee of MPs has called the FCA's acting chief executive Tracey McDermott and its chairman John Griffith-Jones to appear before them later this month to explain the background to the decision.

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Image caption The city regulator has been without a permanent chief executive since September

"The FCA's decision to drop its review of bank culture does seem curious," said Tory MP Andrew Tyrie, who chairs the committee. "The decision to undertake this review was, after all, part of the FCA's business plan for 2015.

"It is not the dropping of the review that is crucial. What matters is the full implementation of the reforms recommended by the Vickers and Banking Commissions and set out to improve conduct in banks."

Mr Mann, the most senior Labour member on the committee, said he believed the Treasury not only knew what was going on but had been directly involved in the decision.

"It's my belief that the government has interfered," he told the Daily Politics.

"I think our inquiry will prove that, hopefully prove precisely how they've interfered. The FCA hasn't reached its own conclusions, it's been told what to do - it's been told via the Treasury."

'No knowledge'

The Labour MP said Mr Osborne, with whom he has frequently clashed at committee hearings, wanted to "neuter" the FCA and parachute "one of his senior officials" in to run the watchdog.

The FCA is searching for a new chief executive after Martin Wheatley's departure in the autumn. Mr Wheatley, who helped set up the regulator and was perceived as being tough on the banks, had been told that his contract would not be renewed.

Ms McDermott has withdrawn her name from consideration to succeed Mr Wheatley on a permanent basis, prompting claims by the opposition that the regulator - which replaced the Financial Services Authority in 2013 - is "rudderless".

The Treasury has strongly rejected any suggestions that it was aware of or behind the FCA's decision.

Speaking on Thursday, Mr Osborne said the scrapping of the inquiry was "a completely independent decision that I had no fore-knowledge of".

He suggested that the work the inquiry was due to undertake had already been completed by the Parliamentary Commission on Banking Standards, which reported in 2013 and the FCA needed new leadership "to take it into its more mature phase".

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