Concerns were raised by the Treasury Select Committee (TSC) when the FCA dropped its review into banking culture which would see it examine areas such as remuneration, appraisal and promotion decisions made by middle managers.
TSC chairman Andrew Tyrie described the decision as ‘odd’ and has summoned McDermott and FCA chairman John Griffith-Jones to appear before the committee.
In a bid to set the record straight, McDermott (pictured) told Money Box presenter Paul Lewis that the suggestion the regulator was taking the government line could not be further from the truth.
“We are not going soft on the banks, we are not being told what to do by the government,” she said. “We have objectives which are set for us by parliament in statute and we are determined to deliver on those.”
Martin Wheatley stepped down from the role in September after George Osborne refused to renew his membership to the board. Since then, the FCA has made several decisions which has led to speculation it will not pursue banks as aggressively for bad behaviour.
Speaking on the programme, a barrister who deals with cases involving the financial services market and the FCA said the evidence ‘seems to support that the FCA are going back to a lighter touch’.
He said the abandonment of the review into bank culture and the decision not to take action against HSBC over its part in client tax evasion carried out in its Swiss division pointed to a change in regulatory enforcement.
McDermott said that the turnaround on the banking review did not mean it had changed its cultural focus but had decided an individual approach to banks rather than an thematic review of the entire industry was more appropriate.
Lewis argued this approach would keep the public in the dark over the findings of individual investigations but McDermott said notices would be issued if actions were taken against firms.
On the decision not to act against HSBC over tax evasion, McDemott said the regulator did not comment on individual cases.
McDermott has decided not to take up the role of chief executive permanently. She said it was a ‘personal decision’ explaining the role was not right for her at this point in her career.