Watchdog probes 21 market leaks by staff in a year

THE City watchdog has held 21 investigations into leaks of sensitive information by its staff in the past year, it admitted yesterday.

The revelation came as acting chief executive of the Financial Conduct Authority Tracey McDermott and chairman John Griffith-Jones were grilled by MPs over the regulator’s decision to drop its inquiry into banking culture.

The FCA did not announce the review cancellation, and both the chairman and the chief executive told to the Treasury Select Committee they did not know how the information became public.

McDermott revealed there are six internal probes under way into possible leaks from FCA employees, and there were 15 last year, which she conceded was ‘quite a lot’.

During the meeting MPs referred to internal FCA documents, which McDermott said had ‘clearly’ been leaked. She said: ‘We have not identified a pattern internally, so we don’t believe we have a person systematically leaking information.’

It emerged on December 31 that the FCA was no longer pursuing its banking culture probe, which had been set to examine whether the way banks rewarded their staff with pay, promotion and bonuses had contributed to recent scandals.

Critics accused the FCA of going soft on banks but McDermott said its was an ‘operational decision’. The FCA intends to monitor the culture at each bank individually.

The select committee also quizzed the bosses about the moment the Chancellor George Osborne announced on Radio Four that McDermott had withdrawn her application to take over the role of chief executive permanently. McDermott said she ‘wasn’t exactly delighted’ with the way it was revealed, and was unsure whether she would stay at the FCA after a replacement is found.

MPs were keen to establish whether or not the FCA was leaned upon by the Treasury to drop its review of banking culture.

In the summer former chief executive Martin Wheatley was sacked by Osborne, who called for an end to ‘banker bashing’. In the months that followed the FCA has dropped a probe into tax evasion at HSBC, has signalled it will set a two-year cut-off point for making PPI claims and has axed the reverse burden of proof, which had required bankers to prove they had acted properly.

When asked if the FCA had been influenced by outside pressures, Griffith- Jones said: ‘The simple answer is no.’