Former Bank of England Chief Cashier and current head of its Prudential Regulation Authority (PRA), Andrew Bailey, has been appointed as the new head of the Financial Conduct Authority (FCA).
The FCA came into being in 2013 taking over as the principle City watchdog when its predecessor, the Financial Services Authority split into the FCA and the PRA.
Bailey will replace Tracey McDermott, who has been acting as interim boss since the previous head, Martin Wheatley, was ousted by the Chancellor last year.
McDermott herself officially pulled out of the leadership race at the beginning of this year for undisclosed personal reasons.
Wheatley, who was hired for his reputation as a tough regulator, was forced to leave as George Osborne claimed that the FCA needed “different leadership… to take the organisation to the next stage of its development.”
It is unclear, ultimately, whether Wheatley was dismissed for being too tough, or for being not tough enough. Many commentators criticised the FCA for being, in the final analysis, ineffective, but there is no question that being created when it was, it had its work cut out for it.
And during Wheatley ‘s tenure (which began at the beginning), in roads were certainly being made in terms of combatting the culture of investment banking that had led to so many scandals.
When Wheatley left, he said: “I am disappointed to be moving on and I do so with a sense of unfinished business”, describing the work he had started and wished to continue as “tough” and that “it takes time.”
One would have thought, that with Tracey McDermott, formerly known affectionately as ëthe Rottweiler ‘ in her previous position as head of supervision, would be a safe pair of hands as interim boss if toughness was the desired modus operandi.
However, since Wheatley ‘s departure, the FCA has come under fire for loosening its grip on the banks and on much maligned banker culture. Indeed one major investigation into general malpractice (with a particular focus on pay and bonuses) that had begun under Wheatley ‘s command was in fact dropped entirely on New Year ‘s Eve, much to the dismay of MPs and the public alike.
In this light, looking back at previous criticism that Wheatley had faced from bank head honchos for “banker bashing” casts something of an air of suspicion over the future of the FCA since his departure (and indeed for the reasons for his departure in the first place).
There is something of a discord between, on the one hand, public disdain for the bankers who many see as responsible for the financial crash and the swaths of other scandals (such as Libor rigging and the recent FX fiasco) that the sector generates; and on the other, the view that it is these bankers in this sector that have brought us out of economic turmoil. And so for those in the latte camper, “banker bashing” as it has been described, and the merciless issuing of large fines is inappropriate. For others it is totally fair game.
The question is: in which camp does the treasury (and the Chancellor) lie?
Osborne, in describing his reasons for appointed Mr Bailey, seemed to be at least ostensibly favouring a measured middle way, saying; “Anyone who has dealt with Andrew knows he will be tough but fair, and understands the flaws and merits of the sector better than anyone.
“We have cast the net far and wide for this crucial appointment,” he said, “and, having led the Bank of England ‘s response to the financial crisis, Andrew is simply the most respected, most experienced and most qualified person in the world to do the job.”
Bailey certainly does have the credentials for the job, having worked in the Bank for over 30 years. Indeed, whether or not you had heard of Mr Bailey, the chances are that you would have seen his name written down ñ during his time as the Bank ‘s Chief Cashier, his signature appeared on all new bank notes.
Bailey said of his new appointment, which will begin as soon as a replacement is found to head the PRA: “Although it had not been my intention to leave the PRA during my term as chief executive, a job that I enjoy enormously, it is a great honour to have been asked by the chancellor to take on the job of FCA chief executive.”
“After a lot of thought,” he said, “I have decided to move and do all that I can to make the FCA effective and successful.”