Regulators will veto the appointment of senior bankers who are deemed not ethical enough, the Financial Services Authority (FSA) announced today.
The lead City regulator, which has already stepped up the number of prospective senior bank personnel it blackballs on technical grounds, said it would now put more emphasis on their ability to instill a more moral culture in the institutions they run.
Hector Sants, chief executive of the FSA, said that bankers still did not accept collective responsibility for the financial crisis. “I personally remain unconvinced that all senior management have taken on board the need to change and operate in a genuinely different manner.”
The new regime would ensure that senior people in regulated institutions were both technically equipped and demonstrated “the required integrity,” he said. A discussion paper would be published shortly exploring how this would be done, he said in a City speech yesterday.
Of 172 candidates for City directorships in the past year, the FSA has rejected 18, it revealed last month. Two months earlier the veto tally was half that level at nine. Until now most of the vetoes have been because of concern about the ability of the candidate to understand and mitigate risks.
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There now needed to be a genuine cultural and behavioural change within the financial industry, Mr Sants said.
Although senior bankers have in theory always had to pass a “fitness and properness” test, the speech suggests the FSA will take ethical concerns much more seriously in future.