City watchdog quietly ditches another probe into bankers

A view from the City of London
A view from the City of London
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THE CITY watchdog declined to comment today after it emerged that it has ditched another probe into the financial services sector.

The Financial Conduct Authority has decided not to go ahead with a study into how lenders incentivise staff to sell financial products to consumers.

It took the decision in spite of concerns that bonuses were responsible for much of the risk-taking behaviour that caused the financial crisis and also led to widespread mis-selling scandals that have cost the banking industry nearly £30bn.

Officials said the area of inducements and conflicts of interest in retail investments was covered extensively by a major piece of European legislation and its study would have been superseded.

It is the latest probe to be ditched by the FCA after its chief executive stepped down in the summer when the Chancellor refused to renew his contract. Martin Wheatley was seen as being too harsh on the City.

A review into Britain’s banking culture in the wake of the Libor rate-rigging scandal has also been ditched.

The FCA said it had decided instead to “engage individually with firms to encourage their delivery of cultural change”.

The move means the watchdog’s so-called “banker bashing” review has effectively ended after only a few months.

That decision was widely condemned this week amid fears that banks will revert to irresponsible risk-taking behaviour.

There is doubt too over another FCA probe into the way that insurers use customer information. The watchdog has questioned whether the use of Big Data poses risks to the treatment of customers and competition in the general insurance sector.