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Wheatley should have been allowed to finish FCA job by Osborne

July 23, 2015

The sacking – for that is what it is – of FCA chief executive Martin Wheatley by the Chancellor of the Exchequer, George Osborne is a vindictive act and one that could come back to haunt the Chancellor.

Wheatley: made an enemy of Osborne

Wheatley: made an enemy of Osborne

Osborne has wanted to ditch Wheatley for some time. He thought he saw his chance in April last year when the Financial Conduct Authority made the one serious mistake in its relatively short existence – bungling the announcement of the review of closed fund insurance policies.That moment passed quickly and Wheatley survived. By then his days were already numbered.

Wheatley’s card had been marked by the Chancellor more because of the FCA’s warnings over the the rush of pensions reforms than for its perceived banker bashing. Indeed, the FCA has acted as useful lightening conductor for public disquiet about the banks and the ease with which they are widely believed to have escaped their full responsibility for the economic and financial chaos of the last eight years.

At yesterday’s annual FCA meeting, Wheatley came under sustained pressure over the regulator’s allegedly lenient handling of the interest rate swap scandal that crippled many small businesses. That criticism is indicative of the underlying public mood when it comes to banks and especially the excessive remuneration of many in the sector: they still want blood. The danger Osborne faces is that he will appoint a new FCA chief executive who will be more sympathetic to the businesses it regulates, especially banks. It will only take one more scandal in the sector for that to cause Osborne some serious political problems as he sets out his stall to replace Cameron as Prime Minister in 2019.

Wheatley did a good job of creating a new regulator out of the breaking up of the old Financial Services Authority. It moved faster, it fired warning shots across the bows of sectors indulging in practices it didn’t like, allowing them to fix their own problems, but hit them hard if they ignored the warnings. It wasn’t intimidated by the protestations of the big vested interests  and certainly wasn’t taken in by the banks’ subtle and sustained campaign to bring the curtain down on the era of banking bashing, unlike the Chancellor.

This blog also appeared on Professional Adviser

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