Financial Conduct Authority chief Tracey McDermott rejects senior MP’s claim that there has been a ‘weakening of resolve’

The acting chief executive of the City watchdog has denied claims it has gone soft on banks following the decision to drop its inquiry into banking culture.

Tracey McDermott, who took over at the Financial Conduct Authority (FCA) when Martin Wheatley left in September, spoke out after criticism of the shelving of a investigation into the behaviour of retail and investment banks.

The findings of another inquiry, into concerns that HSBC’s Swiss subsidiary helped clients dodge tax, is also not expected to be published.

The Treasury select committee has summoned McDermott and other senior figures to give evidence later this month. Its chairman, Andrew Tyrie, has said its recent decisions suggested a “weakening of resolve”.

Speaking to the BBC, McDermott – who recently announced she would not be seeking the job full time – pointed to the regulator’s strong action on Libor and foreign exchange trading.

“We’re not going soft on the banks, we’re not being told what to do by the government. We have objectives which are set for us by parliament and statute, and we are determined to deliver on those,” she said.

“If you look at what I’ve been doing in the last six months since I’ve been in the role as chief executive you’ll see that we have continued to take action against the industry.”

Vince Cable, the former Liberal Democrat MP and business secretary, told BBC Radio 4 Today that he was a “bit suspicious” that the government was going soft on the banks.

“The reason for the suspicion is that shortly after the election, Martin Wheatley who was the head of this body … a tough bank regulator brought in from Hong Kong, it was made very clear he was shown the door,” he said. “He was too tough, he was unpopular with the banks.”

Cable also said there were still too many commission-driven products available in bank branches similar to the payment protection insurance (PPI) that later became the subject of a mis-selling scandal.

“I think that would trouble members of the public because there’s no reason for that,” he said.



Cable said ministers came under a great deal of pressure from the banks not to “destroy the industry”.

“There’s a deeply held belief in the City, totally sincere and there’s a basis for it, that the financial service industry is important to the UK. It’s an important export industry, it generates a lot of revenue and it sometimes follows on from that that politicians should give them much more breathing space than I think is justified by recent history,” he said.



“The public need reassurance that the banks are under careful scrutiny and when there are abuses known to be taking place these should be made public.”

Chris Philp, a Conservative MP on the Treasury select committee, said he did not believe that the government had leaned on the FCA to drop the inquiry, but was worried by the regulator’s decision.

“I actually am worried because Tracey McDermott herself said in July there was still a systematic problem with the culture in banks,” he told the BBC.

“We’re going to get her and chairman of the FCA to appear before the Treasury select committee in a few days’ time, I’ll be asking some tough questions because I am personally concerned about the dropping of that inquiry.”