As the chancellor who introduced the banking levy back in 2011, George Osborne is not as popular in the City as he could be. But last week it looked like he may be trying to work his way back into bankers’ good books.
On Friday, Martin Wheatley, chief executive of the Financial Conduct Authority (FCA) revealed he was quitting after the chancellor told him that his contract would not be renewed beyond March 2016.
The surprise announcement came ahead of the FCA’s annual general meeting, which is due to take place on Wednesday this week.
Commenting on Wheatley’s departure, the chancellor 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.”
Wheatley will step down from his post on 12 September, but will continue as an adviser to the FCA board until 31 January, focusing on the implementation of the Fair and Effective Market Review, which he co-chaired. Although the search is now on for a permanent replacement, Tracey McDermott, currently director of supervision – investment, wholesale and specialists – at the FCA, will take over as acting chief executive from September.
Wheatley has long proved unpopular with City leaders. He once infamously described the FCA’s approach as “shoot first, ask questions later” – a statement he later said he regretted.
In March 2014, Wheatley’s role also came under heavy scrutiny when a briefing to the Telegraph resulted in drastic falls in the share prices for insurance and pension companies. The watchdog was later slammed in an independent report by law firm Clifford Chance for taking too long to respond to the article.
Chris Cummings, chief executive, TheCityUK, an independent membership body for the promotion of the UK financial services industry, said: “We look forward to working closely with Tracey McDermott and Martin’s eventual successor. We hope that the FCA will recognise that in addition to its role of looking out for consumers, it must proactively support the need for the UK to continue to be an attractive destination for firms to invest in and do business from.”
But the British Bankers’ Association chief executive Anthony Browne was more forgiving, saying: “Martin Wheatley has played a big part in rebuilding confidence in financial services that was badly lost during the events of the last decade.
“He leaves large shoes to fill and we wish him all the best for the future.”
The chancellor might have some further work to do if he wants to refresh his image in the City. Although he lowered the bank levy from 0.21 per cent to 0.1 per cent in the emergency Budget, he also introduced a new eight per cent surcharge on bank profits.
Axing Wheatley may have impressed bankers – but they’ll be eyeing his replacement with suspicion.
THE RISE AND RISE OF TRACEY MCDERMOTT
As Wheatley prepares to step down later this year, all eyes will be on the new acting chief executive, Tracey McDermott . Like Wheatley, McDermott has been with the FCA from the start, having been appointed as an FCA board member when it launched in April 2013.
She was promoted into her current role as director of supervision following Clive Adamson’s departure in December 2014. McDermott joined the Financial Services Authority’s enforcement division in 2001, heading up various departments across the Enforcement and Financial Crime Division.
In April 2011, she became director of the Enforcement and Financial Crime division. In this role, McDermott was behind some large and high-profile penalties, including hefty fines to Barclays and its US counterparts for their role in the Libor fixing scandal.
Prior to joining the FSA, McDermott worked as a commercial litigation solicitor, having graduated with a law degree from Queen Mary and Westfield College, University of London. Announcing her appointment as acting chief executive, John Griffith-Jones, chairman of the FCA, said: “I am pleased that we are able to call on someone of Tracey’s ability and stature to take up the post of acting chief executive. I am grateful to her for taking on this role and I know she will do a great job.”
However, given that the Treasury seems keen to make friends in the City, will somebody who has been so closely associated with some of the regulator’s most punitive actions be a popular choice?