Throughout the banking crisis the FSA has been widely accused of numerous failures and inaction, however the City regulator is now being hit with reports of a culture of racism existing amongst senior staff members.

The Observer newspaper has published an internal report from September 2008, leaked by a whistleblower, who added that the problem of racism at the FSA is “endemic.”

The internal report details offensive language and jokes used by senior staff and chief executives of FSA-regulated firms and states that the behaviour is “particularly problematic because it goes unchallenged within the organisation.”

Saying that there was no will for change at the City watchdog, the whistleblower added: “The FSA would rather recruit whites from

South Africa

and

Australia

than blacks from the

UK

…People have left because of frustration with discrimination. They leave before they are sacked.”

Although it remains unclear whether this issue has now been resolved, the FSA has strongly refuted the allegations and taken extra steps to combat the high turnover of staff by hiring more City experts known as “grey panthers” to supervise workers.

Since May, the number of panthers – who are actually no longer called grey panthers and now officially carry the more PC name “senior advisers” – has gone from 5 to 13.

According to the Telegraph newspaper, the panthers are often established industry figures that have the authority to take on other

high profile

City

bosses.

Working from three to five days a week and reporting directly to chief executive, Hector Sants, recently hired senior advisers include former senior partner of KPMG Forensic Accounting, David Smith, and the former chief operating officer for the Financial Ombudsman Service, Ian Marshall.