Time is running out for banks to change culture, FCA chiefs say

Banks have to change their cultures so employees ask whether something is ethical, as well as legal, to maintain credibility and overcome scandals tied to misconduct, according to Martin Wheatley, the U.K. Financial Conduct Authority's chief executive officer.

"There are very few more pressing issues than corporate culture," Wheatley said at an enforcement conference hosted by the FCA in London today. Questions of legality and ethics "should not just be seen as the preserve of compliance."

His words were echoed by FCA Enforcement Director Tracey McDermott, who said that while individuals must be held responsible for their actions, "they don't act in a vacuum."

The FCA has been taking a tougher stand this year against wrongdoing, levying 1.1 billion pounds ($1.7 billion) in fines against five banks for control failures over their foreign- exchange operations that let traders collude with counterparts at other firms to rig currency rates. The penalties came just over a year after the regulator announced its investigation, showing a faster and more aggressive approach than it took on banks alleged to have manipulated interest rates, including the London interbank offered rate.

"Enforcement should not be written off as a trip to the headmaster's office where you take your punishment and leave," McDermott said today.

The FCA currency-rigging fines were part of a $4.3 billion settlement between six banks and authorities in the U.S., U.K. and Switzerland. Citigroup Inc., JPMorgan Chase & Co., UBS Group AG, Royal Bank of Scotland Group Plc and HSBC Holdings Plc reached accords with the FCA as well as other regulators on Nov. 12. London-based Barclays Plc dropped out of the talks on the eve of the announcement and remains in negotiations.