Exclusive: Lay off regulator Martin Wheatley or risk instability, MPs warn

Influential MPs are privately warning for criticism of Martin Wheatley, the head of one of the two City regulators, to be toned down so as to avoid yet more financial instability.

Mr Wheatley was forced to deny that he would quit as chief executive at the Financial Conduct Authority after last month’s botched announcement of an inquiry into the insurance sector.

The Chancellor, George Osborne, said he was “profoundly concerned” after a journalist was briefed about an investigation into 70 million pensions and policies last month, market sensitive information that saw billions of pounds wiped off the value of insurance companies.

Andrew Tyrie, chairman of the Treasury Select Committee, blasted the fiasco as an “extraordinary blunder”, but MPs sitting on that same all-party group are worried that heaping pressure on Mr Wheatley will cause further market chaos.

A source close to the committee told The Independent there were concerns that with such a “huge amount of change in the regulatory environment”, now was not the time to discredit the head of a watchdog that has only been in place for a year.

Foreign investors could also be put off pouring their money into the London markets if they believe there is uncertainty over Mr Wheatley £600,000-a-year position, the source added.

Select committees have few formal powers, but have steadily gained in influence in recent years, depending on the strength of their chairman. Mr Tyrie, the Conservative MP for Chichester, has emerged as a political heavyweight through the financial crisis. This is partly through his work leading the Parliamentary Commission on Banking Standards, which last year demanded better corporate governance among Britain’s lenders.