New FCA chief's stark warning: we'll prosecute bankers for misconduct

Analysis of Wheatley on... Banks: 'The truth is that if our supermarkets in this country, if John Lewis operated in a way that banks do, they wouldn’t have any customers;' Working in Hong Kong: 'I had a funeral effigy of me burnt outside the office. That (Getty Images)

Britain's new chief financial policemen has issued a stark message to the City of London: "We've barely got started."

In an exclusive interview with i, Martin Wheatley, the head of the new Financial Conduct Authority (FCA), warned that people who believe watchdogs are too tough have "a big wake up call coming".

Accusing bankers of avoiding responsibility for misconduct by hiding behind committee management, he raised the prospect of US-style prosecutions of senior executives: "In the future we want individuals held to account."

The FCA, which is a successor agency of the Financial Services Authority, has the power to launch raids on City offices and bring criminal prosecutions.

Mr Wheatley, who last week recommended that bankers who attempt to manipulate Libor face criminal prosecution in his review of the rate-fiddling scandal, pledged to investigate and expose potential abuses in other sectors of the financial services industry.

That could possibly include the gold and silver markets, oil, foreign exchange and even agricultural commodities.

"We will shine a light into a number of dark corners and we will have to take action depending on what we find," Mr Wheatley said.

The regulator also accused banks of mistreating their customers to an extent that would be unimaginable in other consumer businesses.

"If John Lewis operated in a way that banks do, they wouldn't have any customers," he said.

Mr Wheatley on Friday published his report into Libor interest rates which called for sweeping changes to the way they are calculated in the wake of attempts by traders at Barclays and other banks to fix them. He said the roots of this and a string of other financial scandals came from "a deep, dark period" between 2005 and 2008.

"That was a horror period in terms of what we are discovering today in terms of the way people were abused in their financial services. A lot of the things we are dealing with today – Libor, payment protection insurance, interest rates swaps – all of them go back to that period."

Bank of England policymakers are expected to hold off from any further economy-boosting moves when they gather this week amid mounting hopes of a recovery.