Ever since the Conservatives won the general election and wriggled out of a fractious coalition with the Liberal Democrats, it has become clear that the Chancellor, George Osborne, has been angling to take a more emollient line with the financial sector. Nothing surprising there. The Tories have always been close to the City, and getting tough on bankers was never natural political territory for them. Without the Lib Dems breathing down his neck, Mr Osborne no longer has to go through the motions.
The Chancellor made the change of emphasis clear this summer in his Mansion House speech when he urged an end to “damaging regulation” of the financial services industry as part of what he calls his “new settlement”. The removal of Martin Wheatley as head of the Financial Conduct Authority shortly afterwards was widely attributed to the fact that Mr Wheatley had gone about the business of fining banks for mis-selling with too much ardour.
Now the banks have more cause to celebrate after the Treasury scrapped its plan to impose a so-called “reverse burden of proof” regime on senior bankers last week. Under the original proposal, City bosses would have been obliged to prove they were unaware of any regulatory violations that had occurred under their responsibility. Now the FCA will have to prove that a senior executive did not take the appropriate action – not the same thing.
Mr Osborne and his allies may believe the time is right to go easy on the City, with banker-bashing no longer in vogue. But even some Tories are concerned about the way matters are heading.
Andrew Tyrie, chairman of the Treasury Select Committee, said he hoped that the latest U-turn was not the result of “special pleading from the banks”. Good for him. But if other Conservatives have persuaded themselves that the problems in the financial sector in the UK have been fixed, we should be worried. It shows that they have learnt nothing from the past.
Register for free to continue reading
Registration is a free and easy way to support our truly independent journalism
By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists
Already have an account? sign in
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies