Martin Wheatley resigns as FCA chief executive

Martin Wheatley has resigned as chief executive of the UK's Financial Conduct Authority (FCA) after it emerged he was not going to be appointed for a second term.

UK chancellor George Osborne said in a statement today (July 17) the government believes "different leadership" is required as the financial watchdog moves into a new phase of its development. Wheatley's term was due for renewal in March 2016.

"Britain needs a tough, strong financial conduct regulator. Martin Wheatley has done a brilliant job of launching the FCA in tough circumstances," Osborne said.

Wheatley was chosen to lead the FCA from its outset in April 2013, when it became one half of the UK's new "twin peaks" regulatory structure. He was seen as tough on financial misconduct, having led Hong Kong's Securities and Futures Commission for six years.

Wheatley is due to step down in September. Tracey McDermott, a member of the FCA's executive board and director of supervision for investment, wholesale and specialists, will serve as interim chief executive, with Wheatley staying on as an adviser until March. It is understood he will then spend six months on gardening leave.

"I am incredibly proud of all we have achieved together in building the FCA over the last four years," Wheatley said. "I know that the organisation will build on that strong start and work so that the financial services industry continues to thrive."

The process for appointing a successor begins now. Osborne said the government is launching a worldwide search for an individual "passionate about protecting consumers, promoting competition and completing the job of cleaning up the City".

'Problems may still exist'

In the run up to the FCA's launch, Wheatley promised a new culture at the regulator, which would intervene "early and decisively". The FCA has certainly hit financial institutions with heavy fines – a total of £2.2 billion ($3.4 billion) by April 2015, according to calculations by consultancy Wolters Kluwer – to the point where the Bank of England has started to express concerns about the stability impact.

But the FCA has also been rocked by scandal. In March 2014 the FCA pre-briefed a journalist about an upcoming life insurance review. The subsequent article sent markets into freefall, and it took the FCA until 2.30pm on the next day to issue a clarification and return markets to a semblance of normality.

A report by lawyer Simon Davis warned the incident revealed serious shortcomings in the FCA's communications policy. The UK's Treasury Committee went one step further with its own report, attacking the FCA for failing to reform and questioning whether the shortcomings were indicative of broader institutional failings.

"The FCA made a serious error in March last year," said Andrew Tyrie, the MP who chairs the Committee, in March 2015. "The evidence from this episode suggests that problems may still exist at the FCA. It is not yet clear to the Committee that the FCA has fully grasped this."

The FCA is currently in the process of recovering from that shock. "The FCA is determined to learn the lessons and ensure that this will never happen again and will study the Committee's recommendations and respond in due course," it said at the time.

At the time of the report the Treasury Committee had been dissolved due to the impending election, but Tyrie has been re-elected and is back at the helm. He recommended in March the next Committee take the issue up again.

The original version of the story incorrectly stated FCA fines had amounted to £2.2 trillion - the correct figure is £2.2 billion. The article has been amended to correct this.