(Recasts with news conference)
By Huw Jones
LONDON, March 21 The head of Britain's new
financial watchdog said on Thursday it would be no pushover and
would bring more individuals to book, but that threats and fines
alone would not end the abuses blamed for the financial crisis.
Martin Wheatley played down a comment by his predecessor
Hector Sants that the industry needs to "be afraid" of its
"You won't hear from us a 'be afraid' tone. We want a
discussion with senior officials. We have to have a dialogue,"
Wheatley told a news conference.
"It's about having a balanced approach. It's important there
is individual accountability. That will be a priority," he said.
The Financial Conduct Authority (FCA) launches next month,
replacing the 11-year-old Financial Services Authority, as
Britain's government ends a policy of "light-touch" supervision
that failed to avert the 2007-09 financial crisis.
The FCA will enforce rules and punish breaches. A new unit
at the Bank of England will ensure banks hold enough capital.
Wheatley said the FCA would be no "pushover". Its new logo,
which highlights the C, is designed to symbolise a focus on the
behaviour of financial professionals.
But he said relying on ever-larger fines to rein in market
abuse and scandals ranging from financial product mis-selling to
interest rate rigging would punish shareholders the most, in
lower dividends and returns.
Company culture would only change if individuals were also
held to account by regulators and customers, he said.
He dismissed suggestions that U.S. and British watchdogs,
which have teamed up to fine three European banks a total of
$2.6 billion to date for manipulating benchmark interest rates
such as the London interbank offered rate (Libor), were failing
to hold U.S. finance houses to account.
"We've tried to focus on the more egregious cases," he said.
"Some of those cases have come out. Others will now follow."
FCA Chairman John Griffith-Jones, a former top accountant
who was accused by UK lawmakers in January of lacking adequate
experience, said he would aim in the first year to establish the
The new body will try to end years of mis-selling of
financial products that have culminated in banks being forced to
pay 12 billion pounds to date in compensation for loan insurance
"We will be on the front foot when we see things we don't
like," Wheatley said.
Firms are bracing for some of their products to be banned
temporarily while the FCA investigates whether consumers are
being ripped off.
Not all commentators welcome the new intrusive approach.
"The whole development of a new product will become cumbersome,"
noted Etay Katz, a lawyer at Allen & Overy.
Consumer groups, meanwhile, are reserving judgment as new
mis-selling concerns unfold over interest rate swaps.
"We'll be watching closely to make sure the FCA is a true
watchdog, keeps to its word and puts consumers at the heart of
everything it does," said Richard Lloyd, executive director of
UK consumer lobby Which?
The new regulator will give earlier warnings to customers
and will be able to select an expert to review a firm's
operations, with the firm footing the bill.
Lawyers say parts of the market which regulators have
previously focused on less, such as wealth management and
wholesale market conduct, are coming under closer scrutiny.
The FCA is vowing to be more sceptical and "follow the
money", checking products promising easy returns and abusive,
hard-sell tactics in a low-interest environment that could
prompt consumers to take excessive risks with savings.
(Additional reporting by Kirstin Ridley; Editing by Tom