Top City watchdog Martin Wheatley is forced out by the Chancellor

Exit of FCA boss fuels speculation of a shift towards a softer style at the financial regulator

Click to follow
The Independent Online

The City’s chief watchdog Martin Wheatley is to leave the Financial Conduct Authority (FCA) after it emerged he had been told by the Chancellor, George Osborne, that he wouldn’t be kept on for a third term.

Mr Wheatley’s tenure had been due to end next March and Treasury sources indicated it had been made clear to him that his role would not be extended. As a result, he has decided to stand down on 12 September, although he will stay on as an adviser until 31 January, focusing on the implementation of the Treasury- sponsored “Fair and Effective Markets Review”, which he co-chairs.

Mr Osborne said: “Britain needs a tough, strong financial conduct regulator. Martin Wheatley has done a brilliant job of launching the FCA in tough circumstances. Now that phase is complete, the Government believes that different leadership is required to build on those foundations and take the organisation to the next stage of its development.”

That could been seen as presaging a softer style, amid mounting City unhappiness not only with its regulators but also with Government policy, which critics say is pushing business away from the City and its financial services industry.  

Tracey McDermott, who has been overseeing supervision at the FCA, will take over as acting chief executive when Mr Wheatley steps down, making her the first female chief executive of a big financial regulator since Colette Bowe was running the old Personal Investment Authority. Ms McDermott oversaw some of the regulator’s biggest disciplinary actions while in her previous job as head of enforcement.

Mr Wheatley will continue to draw his full salary, which ran to £610,000 during the watchdog’s most recent financial year, for 12 months. He will also be entitled to a bonus for the six months or so during which he will continue to be employed. In the latest financial year his salary was topped up with a £92,000 bonus.

The FCA was born from the ashes of the old Financial Services Authority under a sweeping reform programme set in train by Mr Osborne. While the FSA had supervised both conduct and financial soundness, the Chancellor broke it up, handing responsibility for the latter back to the Bank of England.

Mr Wheatley struck an uncompromising tone in his early days, saying in an interview with The Independent that if supermarkets were run in the same way as banks, they wouldn’t have any customers. However, his copybook was blotted by the mishandling of an announcement of a review into millions of old life insurance policies. This sparked market panic after news of it appeared in a newspaper interview with his former head of supervision, Clive Adamson. A subsequent review sharply criticised the regulator.

Simon Morris, at the law firm CMS, said the timing of the announcement made it look like there had been “a major falling out”. He said: “This may be linked to last year’s disastrous … press briefing, for which many thought the chief executive should have accepted responsibility rather than let subordinates resign. Or it may reflect tensions within the Treasury or the Bank of England. Whatever the reason, this is an undignified end to a regulatory career.”

Robert Jenkins, a former member of  the Bank of England’s Financial Policy Committee praised Mr Wheatley for “walking the talk” when it came to cleaning up the financial sector. “His departure is a big loss for the UK [and it’s] tragic if indeed he was pushed by the Government” Mr Jenkins said.

Mr Wheatley himself said: “I am incredibly proud of all we have achieved together in building the FCA over the last four years. I know that the organisation will build on that strong start.”