Dear New Head of the FCA

I thought it would be useful for me to drop you a line before you embark on your new challenge.

Many of my readers accuse me of being soft on banks and their misselling, market abusive and generally criminal ways. Please let me stress that nothing could be further from the truth. I strongly believe that criminal bankers should be treated as criminals and jailed.

Deterrence has a role in the financial services sector.

My real issue is with the tactics of regulation and the repercussions of the stance taken by your predecessor, Martin Wheatley, who resigned last week.

Treating all bankers and financial services employees as crooks until proven innocent has created a culture of fear in the City of London.

People are frightened of being named, shamed and fined. They are frightened of losing their jobs, losing their homes and being ridiculed in wider society.

This culture of fear leads to a classic human response, described as one of the “three F’s” by psychologists. Fight, flight or freeze. What does this mean? Bankers are fighting by engaging in corporate politics. Bankers are mentally freezing or fleeing the scene and refusing to acknowledge that very real issues remain to be dealt with in terms of the way clients are treated and markets handled.

We are witnessing an environment of mass intrusion, big brother monitoring and surveillance (for example in dealing rooms) and a complete breakdown in trust between regulated and regulator.

Your appointment is the chance to press the “reset” button on the regulator’s relationship with the industry.

Lets transform this culture of fear into a positive culture of collaboration. A culture where bankers communicate with the FCA. A culture where grey zones such as market abuse and the balance between generating profits and treating the client fairly are debated.

Am I being deluded in believing that the FCA should openly praise and name organisations that are trying to do their best? Why not reward these organisations by giving them “pillar 2” credits on capital? Why not have an FCA awards ceremony celebrating banks and bankers who have supported the values and objectives that the FCA and the industry should strive to meet?

We will know we have the right FCA CEO when the word selling is not longer a dirty word in banking.

Banking products need to be sold. It is in the interest of society that they are sold.

But to avoid misunderstanding I do not believe it is in the interests of society that they are missold.

I would like to offer you my full support and encouragement and best of luck.