Inside Track: It’s about time the City’s watchdog got its act together

Mark Kleinman
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WERE British banks engaged in a corrupt pact to bankrupt struggling business customers?

The evidence from dossiers compiled by the businessmen Lawrence Tomlinson and Neil Mitchell is superficially shocking, although as yet inconclusive.

Anecdotal evidence that Royal Bank of Scotland’s global restructuring group has nudged clients into administration when alternative outcomes were achievable have circulated since the bank’s 2008 bailout. That makes a formal inquiry both welcome and overdue.

More alarming is the offhand way in which those attempting to blow the whistle appear to have been dealt with by politicians and bank executives.

Mitchell, the former boss of Torex Retail, says he wrote to regulators, ministers and bankers on myriad occasions to raise a red flag over the allegations, all of which were met with stony silence.

That begs the question: if a Treasury minister can hold 30 separate discussions with the Co-operative Group to smooth a path for a politically desirable takeover of Lloyds Banking Group branches, then how can it be acceptable not to respond at all to a seasoned businessman making such serious claims?

The obvious answer, of course, is that it cannot. While not every company failure can be pinned on the venality of bankers, little of the malpractice endemic within the banking industry was exposed contemporaneously. There must be unsound reason for that. Barclays and RBS have outsourced their hotlines in recent years, ostensibly to afford employees greater protection. On this evidence, however, the system needs further, and faster, reform.

A probe by the City watchdogs must be far swifter and more transparent than the track record of the Financial Conduct Authority or its predecessor would encourage us to anticipate.

The investor forum launched this week by bodies such as the Association of British Insurers and National Association of Pension Funds could be easily dismissed as yet another City talking shop.

That would be a mistake, since this new panel, born out of last year’s Kay Review, has the potential to be something meatier.

Its two years of up-front funding removes from the table the usual questions about resourcing, but more importantly, the buy-in from both sides of the investment equation means it has a chance of escaping the Punch and Judy caricature of much of today’s shareholder engagement.

That isn’t to say it is guaranteed to improve matters. There’s little evidence that overseas investors would, for example, devote sufficient time to UK investment affairs to make their involvement worthwhile.

What the forum needs to ensure that its punches land with sufficient weight is a prominent frontman. Could Anthony Bolton, the departing Fidelity star, resist an approach?

There were no reports of a punch-up on David Cameron’s flight to Beijing, but the make-up of his entourage suggests that fact should be in the box labelled ‘faintly surprising’.

Xavier Rolet, chief executive of the London Stock Exchange, and Garry Jones, his counterpart at the London Metal Exchange, were listed next to one another in the line-up of business delegates, but I doubt were in adjacent seats on the PM’s plane.

Their rivalry dates to 2010, when Jones – then an executive at NYSE Euronext – stood up at an industry conference to harangue the LSE boss over the quality of its derivatives offering.

“You have a lot to be modest about,” Jones said at the conference. Ouch.

The Chinese and British governments might have kissed and made up since last year’s row about Mr Cameron’s meeting with the Dalai Lama, but have the two exchange bosses?

Mark Kleinman is the City editor of Sky News @MarkKleinmanSky