Bankers 'have not learned lessons'
Nov 10 2009 by Peter McCusker, The Journal
THE head of the City watchdog said bankers had failed to take responsibility for the financial meltdown as he made a new call for reform in the industry.
Financial Services Authority (FSA) chief executive Hector Sants said the regulator would “not presume“ that banks would learn the lessons of the past as it steps up its supervision of the sector.
In a speech in London he said: “There remains, I believe, an absence of the acceptance of collective responsibility for what has happened.
“I personally remain unconvinced that all senior management have taken on board the need to change and operate in a genuinely different manner.”
His comments echo recent remarks made by Bank of England Governor Mervyn King, who said that never had so much been owed by so few to so many “with little real reform”.
Despite a more intensive supervisory regime - including an extra 280 staff - Mr Sants said there were limits to what rules can achieve.
“It would be a mistake not to recognise that some of the failures which have occurred have their roots in issues of culture and behaviour,” he added.
Mr Sants also warned that the FSA would continue its approach even as the economy begins to recover.
He said: “Regulators must be able to ’go against the tide’. Politicians, and the industry, must resist temptation to apply pressure to return to ’light touch’ regulation and row back the results intensive supervision is delivering.”
Mr Sants also fired a shot across the bows of the Conservative opposition, which has pledged to scrap the FSA if it wins power and hand back supervisory powers to the Bank of England.
He said: “I can understand why, in the light of events, there is considerable debate about institutional structures but in considering any institutional changes, failing to take into account the lessons learnt from the last two years would be grossly irresponsible.”
With the possibility of tougher times to come for financial firms, he added that “now is not the time to be diverting resource to looking at ‘structural questions’”.
