A drastic shakeup of top positions at the City’s main financial watchdog was announced yesterday, ahead of tomorrow’s release of a damning report on failings at the regulator.
The Financial Conduct Authority (FCA) confirmed that executives Zitah McMillan and Victoria Raffe are to leave the organisation, which is to undergo a complete restructure. The departure of director of supervision Clive Adamson was also confirmed, having been revealed last week.
The changes were made following a strategic review at the public body. Yet the decision to go ahead with such a radical restructuring before the contents of tomorrow’s report can be digested by the public and fellow authorities has raised eyebrows. A Treasury source said the announcement had an “elephant in the room appearance”, as it did not mention the forthcoming Davis report.
The report is into the FCA’s handling of a selective leak to the media in March 2014. Billions of pounds were wiped off the market value of several insurance firms when the Telegraph reported that the regulator was to conduct a review into 30m policies.
Clifford Chance partner Simon Davis was appointed to conduct an investigation into the affair.
“We’d be in jail by now if we’d done what they did,” one insurance exec told City A.M. yesterday. “The organisation is totally out of control.”
The FCA said that the reorganisation is unrelated to the Davis report.
The winner of the FCA’s reshuffle appears to be director of enforcement Tracey McDermott, who is to take on a raft of new responsibilities as she manages part of the organisation’s restructure.
She has been tasked with combining the current Authorisations and Supervision divisions. This joint division will then be split up again, with two new divisions forming from 1 April 2015. McDermott will run one of these divisions.
McDermott is seen as one of the more aggressive senior figures at the regulator, alongside chief executive Martin Wheatley.
She takes “a pretty jaundiced view of most business practices”, according to one City source last night, who added: “She takes a most aggressive line with commercial business.”
The chairman of the Treasury Committee, Andrew Tyrie MP, said “serious concerns” have been raised about the way the watchdog has approached its responsibilities since it rose from the ashes of the Financial Services Authority in April 2013. The Treasury Committee examines the expenditure, administration and policy of the FCA and other public bodies.
Tyrie added that although the changes announced yesterday looked substantial “at first glance”, the committee would need to examine the review in detail.
“It is also crucial that the FCA learns any lessons that emerge from Mr Davis’s report,” he added. “The Treasury Committee was instrumental in ensuring that the apparent major error by the FCA in March 2014 was subject to independent external review. The Committee intends to take evidence on both the pre-briefing inquiry and the strategic review in the coming weeks, initially from Mr Davis.”
Oliver Parry of the Institute of Directors was hopeful about yesterday’s changes. “I think it’s important in view of what’s happened with the leak that the FCA takes stock and tries to move forward in a way that helps regulation but also helps the City,” Parry said.
Caitlin Morrison, David Hellier