In March 2009 the former head of the Financial Services Authority, Hector Sants, said: “People should be frightened of the FSA.” I am a former Metropolitan Police detective and later a bank compliance officer. Ultimately, I blew the whistle against Wachovia in connection with allegations of laundering the proceeds of Mexican drug trafficking, for which the US bank paid a penalty of $160m. I am frightened but probably not in the way Mr Sants intended. I fear that the approach that encouraged the financial crisis has still not been replaced. This will have a damaging impact upon the UK economy.
Three years on, I have not found the fear Mr Sants was hoping to instil. This failure has led to further instances of bad banking and scandal. There are some who neither fear nor respect the FSA as a credible regulatory authority. In 2011 the FSA imposed fines totalling £66m. So far in 2012, US authorities have fined British banks about $700m. Does the sum of £66m present a credible deterrent?
There is an increasing sense of public anger at the actions of some bankers. In a speech in 2010 Mr Sants stated: “Trust has been lost between the financial community and the rest of society.” This has only been compounded by the Libor scandal and the comments from bankers who have suggested that the dishonest submission of false rates may not be criminal. Such a suggestion does nothing to restore the public’s trust.