Cover

Michael White,

chief executive, Email Mortgages

A short time ago I would certainly have argued that the regulator seemed to be avoiding the direct pursuit of those senior managers and particularly directors who had a direct bearing on the failure of many banks which led to the credit crisis and the subsequent worse recession in living memory. However, it is now apparent that the regulator is finally beginning to address the issue of appropriate punishment for the top executives in these failed banks. You only have to look at the Johnny

Cameron episode to realise this. Moreover, Hector Sants has warned the industry that his staff will be “judging the judgments” of top managers. And some prominent City lawyers say

wash their hands of their own part in bringing them to the point of (almost) no-return still seems remarkable, surprising and utterly depressing in equal measures.

No ComebaCk

At present one can only imagine that the individuals concerned managed to arrange their own pardons while the deals were being done; no doubt getting the main protagonists off the scene quickly seemed to be a price worth paying for the government in order to stabilise the banks themselves and deliver some confidence to the markets. However, it is all rather galling that there has been no comeback and that ultimately these individuals have not been held responsible for their actions. In a truly wider sense, this inaction is even more dispiriting to those who continue to work in financial services because of the greater emphasis that is now being placed on the decisions and actions of the individual within the firm. Mortgage advisers may well look at

22 moRtgage intRoduceR JUNE 2010

regulators are pressing forward with investigations of several other former senior executives and board members of the banks and building societies that ran into serious trouble during the credit crisis. In this regard, the FSA have already fined and banned two former executives from Northern Rock, including the former deputy chief executive, due to misreporting some 2000 ‘bad’ loans. There are also the recent reports of the FSA taking a ‘hard-line’ approach after finding weaknesses in five banks’ handling of customer complaints. The initial outcome of the review was that two of the five have now been referred to enforcement for further action. Interestingly, but I suppose not entirely surprisingly, the FSA declined to comment on which banks faced enforcement action - quite bizarre but maybe a reflection that while all financial institutions are equal in the eyes of the regulator, some are perhaps more equal than others?

the regular missives emanating from the FSA with regards to regular fines, bans and public censures of brokers and wonder if we do not have something of an unlevel playing field here. Individual registration of mortgage advisers is on the way which will only add to the level of responsibility that advisers must take on.

Those who operate under the FSA’s SYSC rules will also wonder why they are required to be whiter than white; they will look at the largesse of those who ran some of our biggest banking institutions and will wonder what punishment they would face were they now to conduct themselves in a similar manner.

iNdividual respoNsibility

At the heart of all this is individual responsibility and accountability – in many of the cases listed previously it went AWOL and yet the regulator has so far failed to bite.

It is not too late though and we have

already witnessed the FSA being far more active in holding individuals to

In any event, it would appear that at most of the banks under review, senior managers didn’t properly supervise workers on how to handle complaints and, because of bank policies, branch staff were reluctant to offer compensation even if the bank was in the wrong - clearly quite unacceptable actions. I suppose my only concern now is just how does continuing regulatory enforcement work in a hung parliament environment? Might the initial actions and threatened punishment be left to idle as the necessary governmental changes take effect?

All will be revealed before this year is out and during that period many errant senior executives will, I suspect, be quaking in their boots as they hope the hardline actions being threatened by the FSA will transpire to be no more than transitional lip service, although the Bank of England may have other ideas.

account, however it seems obvious that it has barely touched the surface of the action it could take.

Acts of fraud seem to have been dealt with quickly, but there are many further serious failings and actions which need to be addressed, for example, the regulator is issuing fines to lenders and banks for unfair arrears charges and poor complaint handling which have resulted in clients being out of pocket. Is it right in these situations to look at the individuals at the organisation as well as the overall institution?

This is a question which needs to be asked and certainly the general public will want to be shown where corporate and individual responsibility merge. The facts of the matter can be brutal; no-one believes that making mistakes and errors feels great. Very few people set out to mess up;

problems occur, they are not dealt with, they get compounded and soon things are out of control. However, for too long the next step has been for individuals to blame anyone Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48