The Financial Conduct Authority (FCA) is being accused of bowing to political pressure following its decision to scrap plans to investigate the pay, culture, and behaviour of staff in banking.
The watchdog had been expected to report on whether internal culture had contributed to misconduct across the scandal-ridden sector. But instead, it said Thursday, the FCA will directly work alongside banks to address any issues and ensure "cultural change".
The move was criticised by the consumer body Which. "It's disappointing that the regulator has decided against publishing this report on the culture of banking," said executive director Richard Lloyd.
"Cultural change doesn't happen overnight, so despite signs of improvement, the FCA must not take their eye off the ball and should continue to clean up the industry."
His concerns were shared by Mark Garnier MP, a Conservative member of the Treasury Select Committee, who hinted the Treasury may have had a hand in the decision.
"There's always been this great argument that perhaps the Treasury is having more influence over the regulator than perhaps it ought to," Garnier told the BBC.
"And certainly if I was looking for a Machiavellian plot behind what's happened here and the tone of the regulator then I suppose I would start looking at the Treasury."
An FCA spokesperson told BuzzFeed News that "a focus on the culture in financial services firms remains a priority for the FCA. There is currently extensive ongoing work in this area within firms and externally.
"We have decided that the best way to support these efforts is to engage individually with firms to encourage their delivery of cultural change."
Sara Spary is a consumer business correspondent for BuzzFeed News and is based in London.
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