The City fraudsters' new friend, Martin Wheatley, who recently said that the FCA considered the mis-selling of financial products to be a long way from being fraud, thereby handing a get out of jail free card to the banksters and organised banking criminals, has outlined his new proposals for the future activities of the Financial Conduct Authority. Please don't hold your breath though, because there is nothing in this latest announcement to strike any fear into the hearts of the crooks in the suits.
He has tried to talk tough and has tried to identify those areas of policy which he believes are needed to make the regulatory system more effective, but for someone like myself who has been around this particular block for so many years, I can only say that it has all been said before, in so many different ways, but the outcomes are always the same. Inertia, lack of action and ultimate failure.
Oh I know that I will be accused of nay-saying the new head of the new regulator, but sadly, for me, he is the wrong man in the wrong job at the wrong time. Martin Wheatley is a City establishment man down to his boot straps, he comes out of the London Stock Exchange, he has formerly worked at the FSA, the failed body whom the new FCA is now replacing, and he has worked at the Hong Kong Stock Exchange.
He is a City insider and part of that magic circle which runs the financial sector. He may want to see change and he may even want to see reform, but does he have the balls, the ability and the knowledge to achieve this. Above all else, does he have the willingness to break through the City cultural shibboleths, and take on the great and the good at their own dirty games, knowing that he is running roughshod over so many of the practices and the activities of those in his cultural milieu ?
Would he have had the courage to face down 'Roberto Diamante', the great Godfather himself, and put the horse's head in his bed when Barclays started playing around with the LIBOR market, or laundering US sanctions money? Would he have had the wit to take on 'Fred the Shred'. the Capo di tutti Capi of the Edinburgh banking mafia, when he was allowing his ego to control him, and engaging in acquisition suicide, when he should have been keeping his eye on his fiduciary duties towards his shareholders, employees, and Government? Unhappily, Fred was fixating on which member of his staff had put a pink wafer biscuit on his coffee-time biscuit plate (I kid you not), and was far beyond rational discussion, but it still needed a strong man or woman to put him down, and there wasn't one to be had. Would Martin Wheatley have had what it takes?
I doubt it very much! Why do I make such an unambiguous statement? For the very reasons I have just said. He is an insider, a fellow-traveller, he has known what it is like to sup from the gold-plated goblet, and he knows how the stock exchanges work. No doubt he regrets the criminal predilections of some of his former colleagues, I am not saying he is a dishonest man, but he is culturally predisposed to see the actions of the City as inherently good and honourable!
He has already identified his views on City crime by his statement on the 'Today' Programme. He sees financial mis-selling as being '...a very long way from fraud...' Such a statement brands him for what he is, a City apologist! That is why he is the wrong man for the job.
He cannot see any need to act immediately to go after the criminals who have cynically manipulated the LIBOR market. No, he want to have yet another period of discussion, of consultation, a new set of processes and procedures to be brought in, more bureaucracy to pile on existing red-tape. He wants a new oversight manager to control LIBOR in future, because the BBA managed to fuck up the process in such a startlingly predictable way! He doesn't want the responsibility of oversight directly for his new agency, God no! That would mean that they might have to be judged on their competence at some future time. No, he wants someone else to take on that poisoned chalice so that he and the FCA can go on pouring out policy statements, just like his predecessor, the Fantastically Supine Authority!
In the true guise of the new bureaucrat, he calls for new criminal offences to be enacted to deal with LIBOR manipulation in future. He does this secure in the knowledge that this will take time, probably a couple of years at least, during which the present criminals will have had a chance to cover their tracks and get out of the spotlight, so no-one will go to jail this time!
Why not? we don't need new laws, we don't need new legislation, we already have plenty of criminal laws to deal with LIBOR manipulation, starting with Conspiracy to Defraud, moving through Section 4 of the Fraud Act 2006, and down to my favourite, which I used a lot as a fraud-squad officer, False Accounting under Section 17 of the Theft Act 1968.
Any one of these offences could be used right now, and people who abused them could be soon standing in the dock at the Old Bailey, but there is no will to see this done. The City has always considered itself to be a protected species, and Martin Wheatley is doing what his political masters want and making sure that no dirty flak explodes over the Square Mile for the foreseeable future. That is why he is in the wrong job.
By his pronouncements and his public statements and his time-table. he demonstrates the most worrying thing about his appointment, He doesn't know the law! He clearly doesn't know that mis-selling is downright fraud on an institutionalised level! He can be criticised for this, because it is a simple fact and the fact that he doesn't know the law of fraud is a matter of great concern, because it means that fraud will certainly go unnoticed because he doesn't know enough to identify it.
He also doesn't appear to know that there are enough laws to go after the LIBOR crooks today, right now, and lock them up. It may be that he is 'only obeying orders' which have come down from somewhere way above his pay grade, because I cannot imagine that the Government wants the London Interbank Market being proven to be a bunch of fraudsters. Better let the issue drift on for a while until the heat dies down, and cover it all up with a lot of new regulations.
This chimes with the new regime of inertia which we are promised. Instead of re-doubling efforts to look for wrong-doing, the new watchdog intends to cut down on visiting member firms. As part of the changes, Mr Wheatley said many firms could face less intrusive regulation in future as resources are shifted towards dealing with the most pressing issues and what he described as “cross-industry projects”. Wheatley has described this as staff at the FCA becoming bolder, but the reality is that they will concentrate their efforts on thematic reviews rather than focusing on individual firms.
Wheatley knows this is a dangerous and risky plan and has tried to meet the criticism head on by saying : “One of the questions I am asked is it is all very well talking about this culture change but you employ the same people today as the FSA did yesterday, so what is really different..? "
"...Partly what is different is the legal powers the FCA will have, and partly it is the messaging from FCA chairman John Griffith-Jones and I
(sic) about how we expect people to operate. We do expect people to ask tougher questions and be more intrusive. I want people talking to the chief executives and not the heads of compliance. I want to know where a business is going, not how it has complied with a set of rules...”
Well, if we are expecting more intrusive investigation from staff led by John Griffith-Jones, we had better not hold our breath. This most obvious member of the City and Good Old Chaps establishment has a track record which doesn't exactly inspire confidence for its insightfulness and ability to ask the difficult questions. If you doubt this assertion, read the shocking insights provided by my friend Ian Fraser in his excellent blog at;
Wheatley has said the FCA will continue to focus on its enforcement work. Sorry, can someone help me with this one, what enforcement work? Since its official inception on 1st December 2001, when it was given powers to prosecute financial crime, and money laundering, the FSA has managed to bring about 20 cases before the criminal courts, and has managed to discipline only 3 banks for failures in their anti-money laundering compliance.
So when Wheatley says; “...Do not expect to see a change in our appetite to tackle serious cases of wrongdoing in the market. Credible deterrence remains central to our strategy...” then I am forced to look again at the FSA's track record to see whether he is being serious or is he perhaps being ironic?
He has set out the three outcomes of the FCA, based on putting consumers at the heart of business. These are that:
· consumers get financial services and products that meet their needs from firms they can trust
· firms compete effectively with the interests of their customers and the integrity of the market
· markets and financial systems are sound, stable and resilient with transparent pricing information
If these are the priorities of Wheatley's new regime of competence, then I seriously have to ask '...what the fuck have the FSA been doing all these years, if these three criteria were not at the forefront of their regime of compliance? Obviously they cannot have been a priority if they now have to be publicly stated, so what has been going on?
Finally, a small point that I picked up at the end of some of the commentaries about Wheatley's plans which made me laugh out loud. It seems that the new enforcement regime believes that one way of protecting investors would be for it to be able to ban certain risky financial products and to deny firms the right to possess misleading advertising material! The report stated;
"...Regulators could ban risky financial products for up to a year without any warning, according to Britain’s most senior market enforcer.
Martin Wheatley, head of financial conduct at the Financial Services Authority, said the authorities could ban for as long as 12 months the sale of products that “pose unacceptable risks” to consumers as well as prohibiting “misleading” advertisements..." Why was this funny to me?
These were precisely the powers contained in the old Prevention of Fraud (Investments) Act 1953, the legislation which underpinned the so-called regulatory regime which existed prior to the passing of the Financial Services Act 1986. This was legislation which was so roundly derided by civil servants and Government ministers at the time as not being fit for purpose, and which needed to be repealed and new laws introduced. And guess what, here they are again, all these years later. Old laws are like late buses, wait long enough and they all come round again.
The only way that Wheatley and his FCA can prove that they are doing their new job properly is by the number of banksters and banking Mafiosi they can convict and lock up for ordinary crimes of theft and fraud. Then and only then will we know for a fact that they are doing their job properly. Anything else will just be another wagon-load of complete bullshit!