Is de-banking, something that seems to be happening in rising numbers, an unintended consequence of the interpretation of incoming environmental, social and governance directives from the Financial Conduct Authority?
In late July, Panacea Adviser updated its members on the ongoing scandal of the de-banking of those considered to be ‘not one of us’.
A lot has gone on since then. NatWest was engulfed in a full-blown media crisis after its chief executive, and that of Coutts, had to step down.
Shares plunged, amid calls for the whole board to go over the scandal, although it revealed a set of strong second-quarter results in July, which beat analysts’ expectations.
The only big name still standing was - and still is - NatWest Chairman Howard Davies who, when the debacle started to unravel, gave the classic football club chairman vote of confidence in support of Alison Rose. He is set to retire next year, according to the FT.
Davis will be remembered fondly by IFAs as the man who was at the now-defunct Financial Services Authority.
(Long-term readers of FTAdviser will remember the print title Financial Adviser caricaturing him as 'Howard the Duck' in its old 'Regulation Street' cartoons.)
In its short life, the FSA failed to rein in the banks and even encouraged the City to explode in the mid-2000s with a 'light touch' approach to regulation.
It did not notice that Northern Rock was built on such shaky foundations that it could easily run out of money and failed to prevent the takeover of ABN Amro by RBS just as the credit crunch was biting in late 2007.
At the time, MPs had accused the watchdog of being "asleep at the wheel" during the run-up to the financial crisis.
Critics questioned, at the time, whether Sir Howard was the right person to run RBS, now part of NatWest – which is still part owned by taxpayers.
Jonathan Isaby, chief executive of the Taxpayers' Alliance, said at the time: "His record doesn't inspire tremendous confidence."
ESG scrutiny
Fast forward to the FSA successor, the FCA. It revealed plans in October 2022 to scrutinise companies use of terms like ‘ESG’, ‘green’ or ‘sustainable’ in a bid to prevent firms from misleading investors.
In January 2023, Harriett Baldwin, the chair of the influential Treasury committee, slammed the FCA over its planned ‘greenwashing’ rules, claiming the regulator landed on “suspiciously round numbers” to justify the plans and questioning the methodology it used to reach its conclusions.
Over the past week, as widely reported, several high-profile Conservatives and ex-finance industry leaders have written to the chancellor, expressing worries that the FCA may have unintentionally fostered the banking culture that led to Nigel Farage’s loss of his Coutts account.
They said: "The FCA has actively been pushing an approach that imposes a cultural shift and diversification of thought in banks and other financial firms”.
