Britain’s top financial regulator, who was abruptly sacked last week by George Osborne, has said that he leaves the job with a sense of “unfinished business”.
Martin Wheatley, the chief executive of the Financial Conduct Authority, speaking publicly for the first time since his exit was announced on Friday, made it clear he is not departing willingly.
“Frankly, I am disappointed to be moving on and I do so with sense of unfinished business,” Mr Wheatley said at the FCA’s annual public meeting in London. “There is still work to be done but I am more convinced than ever that conduct is at the top of firms’ agenda.”
The Treasury announced last week that Mr Wheatley’s five-year contract, which was due to expire in March 2016, would not be renewed, provoking fears that the Chancellor’s decision had been influenced by Mr Wheatley’s many vociferous critics in the banking industry.
"Bankers influence politicians and politicians influence regulators. Often the difference between effective and ineffective regulation is the courage of the regulator to resist these pressures,” said Robert Jenkins, a former member of the Bank of England’s Financial Policy Committee. “Martin Wheatley had the necessary courage, much to the dismay of those institutions he supervised.”
British banks and financial firms have been hit by successive waves of misconduct fines for rigging interest rates and mis-selling financial products. Mr Osborne was forced to defend his decision to dispense with Mr Wheatley’s services at the Treasury Select Committee on Tuesday. “I think he did a very good job in difficult circumstances… But for the FCA going forward, my judgement is that we can find new leadership to strengthen that institution so it is a powerful consumer champion,” the Chancellor told MPs.
Mr Wheatley was recruited from the Hong Kong financial regulator to head up the newly established FCA, which replaced many of the functions of the old Financial Services Authority. John Griffith-Jones, the FCA’s chairman, praised Mr Wheatley’s contribution: “Establishing a culture at a new organisation is a pretty lonely, top-down process,” he said.
However, Mr Wheatley came in for heavy criticism for the FCA’s disastrous handling of a probe into historic life policies sold by insurers in March 2014, which was pre-emptively briefed to a single media outlet and sparked market chaos.
At his Mansion House speech last month the Chancellor promised a “new settlement” with Britain’s financial firms, widely interpreted as a desire to ease the regulatory pressure on the sector. “Simply ratcheting up ever-larger fines… is not, in the end, a long-term answer,” Mr Osborne told his audience.
Mr Wheatley expressed concern that the conduct of City workers might become less of a priority as memories of the 2008-09 financial crisis receded. “As the [economic] cycle turns, so the focus becomes different,” he said.
He will formally step down on 12 September, and his role will be filled on a temporary basis by Tracey McDermott, the FCA’s director of supervision, while the Treasury conducts a search for a successor.