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Nic Cicutti: Will Wheatley’s exit mean a toothless FCA?


First, a quick disclaimer: I have never met Martin Wheatley. Anything I know about the FCA’s boss comes either from speaking to those who have dealt with him, or is culled from the pages and websites of newspapers and other organisations that have covered his activities in recent years.

In that sense, my knowledge of the man is bound to be extremely limited. But I cannot help feeling that Wheatley’s defenestration – strictly speaking, his departure in September follows the likely non-renewal of his contract as the FCA’s chief executive – marks the high tide of interventionist financial regulation.

If so, it will be a pity. Yes, I know the reaction of many advisers to his impending departure has been a mixture of indifference and glee at a high-up at the regulator being forced to walk the plank.

Indeed, one or two responses have been even less subtle. In a typically diplomatic style, always guaranteed to make friends and influence people, Libertatem boss Garry Heath described Wheatley as a “reverse Filth – Failed in London. Try Hong Kong. Now he has failed in both!”

As usual, many of the epitaphs of the past few days have reflected on some of the mistakes that led to his being told by George Osborne that his services would no longer be required.

Bristol-based adviser Julian Stevens writes of Wheatley’s “insolent” refusal to pay back £118m of alleged overcharging by the FCA of A13 advisers, who do not handle client money, compared with those in the A12 category, before the two merged in 2014/2015.

Julian ignores the detailed response provided by FCA chairman John Griffith-Jones to Treasury select committee chairman Andrew Tyrie, explaining the reason for the different charging structures between the old A12 and A13 categories before they merged.

Other subsequent justifications for Wheatley’s departure are also nonsense, of course, including the one that, compared with previous regulators, he was too fond of seeing his name in print or being interviewed on the telly.

Really? Unlike past FSA chairmen Sir Howard Davies and Lord Adair Turner? Those two were never out of the news, to the point where you sometimes wondered whether their next appearance on the box might be on Strictly or Big Brother.

No, it wasn’t any fondness for media exposure that did for Wheatley but his determination to root out some of the major financial scandals of the past few years.

Wheatley was completely right to talk of “shooting first and asking questions later”, another stick used to beat him last week. Back in 2012 the FSA could only take action against a director if they were “knowingly concerned about a contravention of the listing rules”.

Tightening the rules to allow action against directors who “knew, or should have known” of the contravention raised the bar by insisting that they did their jobs properly, instead of trousering tens of thousands and not asking the right questions.

The FCA was also right to talk about publishing warning notices at an earlier stage and using far more readily its new powers to intervene in risky products and ban them from being sold.

As advisers know from experience – and from the massive Financial Services Compensation Scheme levies they have paid to recompense Arch cru victims – it is often failure to step in quickly enough that has cost the most, both for consumers and the industry.

Similarly over the forex scandal, it was the FCA’s joint action with key financial regulators in Switzerland and the US that led to record fines against a number of UK banks, plus Citibank, JPMorgan Chase and UBS in 2014.Ironically, as I wrote only a few weeks ago, it was the Treasury – and Osborne, the man who has disposed of Wheatley – who benefited from these fines.

Yes, there were people calling for Wheatley’s head, especially over the briefing given by FCA director of supervision Clive Adamson to the Telegraph newspaper in March 2014 that the regulator was planning a wholesale investigation into more than 30 million life insurance policies sold from the 1970s to the end of the 1990s.

The immediate consequence was that share prices in companies with high numbers of such policies plummeted. It took hours before a correction was made to the effect that the probe would not be as far-reaching as had first been feared.

The Association of British Insurers’ then director-general Otto Thoresen called Wheatley and told him he should be considering his position. Yet by restricting the nature of the inquiry, the FCA effectively ensured its investigation never looked at insurers’ charges in enough detail.

This was an acid test for the regulator and it failed to adequately support policyholders over the issue, with many paying over the odds in charges on older policies.

My fear is a future FCA chief executive will be even less likely to rock the boat when it comes to mounting the kind of pre-emptive investigations and interventions that millions of consumers really need.

It also raises questions over the leeway that new pensions minister Ros Altmann will have when looking at similar issues. If I were an adviser, rather than cheering Wheatley’s impending exit, I would worry about its long-term impact on my clients.

Nic Cicutti can be contacted at


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 23rd July 2015 at 1:35 pm

    Given that Andrew Tyrie put to Martin Wheatley that there is, at the very least, a strong moral obligation on the part of the FCA to refund the £118m we were overcharged by the FSA, it would appear that he too has ignored the detailed response provided by FCA chairman John Griffith-Jones. Either that or he doesn’t consider said response to constitute a credible case for refusing to do so.

    Or has he backed down and now accepts that there has, in fact, been no overcharge?

    Assuming you’ve read Griffiths-Jones response, Nic (which I have not), do you consider it to constitute an adequate rebuttal?

    As for the risk that Wheatley’s successor may be too timid to rock the boat when it comes to mounting the kind of pre-emptive investigations and interventions that millions of consumers really need, I suggest that pre-emptive investigations are exactly what are needed instead of after-the-event ones. Pre-emptive investigations might well avert the seemingly endless succession of motorway pile-ups, at the scenes of which the FCA has an established track record of turning up after the event and then dumping on the adviser community the costs of cleaning up the carnage.

    As for Clive Adamson’s bungled briefing of the Telegraph over the FCA’s plans for a hatchets and sledgehammers review of legacy policies, I have it on good authority that the real villain of the piece was Zita Macmillan (head of Communications) and that Clive Adamson was at the time out of the country. But he had to take the rap because he was Macmillan’s boss.

    How the FCA moves forward from here will depend greatly on two things. Firstly, much will depend on the sort of person who succeeds Wheatley. Will s/he be someone really determined to make a positive difference to the way in which the FCA functions and how it accounts for its actions? Or will s/he merely be a puppet of the Treasury? The FCA needs a leader who is radically different from and less constrained by political considerations than either Wheatley or Sants.

    Secondly, we hope very much that the TSC is successful in securing from the government the powers it is now seeking to enable to it to hold the FCA to account for its failings and/or misdemeanours, with the authority to impose meaningful sanctions for non-compliance with its directives.

    The FCA needs to change radically and for that it needs a radical new CEO.

  2. Steven Farrall 23rd July 2015 at 2:14 pm

    None of the things that are cited that the FCA/FSA should have done need to be done by an FSA/FCA type of organisation. Forex rate fixing would be better done by the Bank of England (who itself ‘rigs interest rates’ every day). Listing issues would be better done by the Stock Exchange, as it has much greater interest in seeing that its rules are adhered to that does any self-interested functionary. ‘Risky’ products (and the meaning of that varies by individual preference) is a product of failed regulationism and interventionism and would not arise in a properly free society. It is impossible to mount pre-emptive investigations as it would simply kill innovation. What? Are you recommending that we move to a ‘Minority Report’ future? ‘Paying over the odds on charges for older policies’, really, what happened to the sanctity of private contract? Of all the remarks that is epically stupid. Are you going to go back and ask for a refund on the car you bought 20 years ago because the current price/quality of cars has improved?
    I now know why I decided years ago not to read Nicutti’s drivel. I won’t again.

  3. Nic there is no need to flag up that you have very limited personal knowledge or experience of Martin Wheatley. Because you have no knowledge of giving financial advice Nic and yet you express opinions about advice and those who give it without any fear of letting the facts get in the way of an average story. And furthermore you seem to have no actual experience of pretty much everything you write about. That’s why you are such a funny man, and why I find a big smile appearing on my face every time I am about to get indignant about your musings.
    It is good to know that most advisers already know how little you do know about anything as it saves you having to tell us how little you know every time you put pen to paper or fingers to keyboard.

  4. Steven Pearman 23rd July 2015 at 2:44 pm

    Wheatley tried the school headmaster approach and for that he deserves the kicking the media is giving him.

    The misuse of small sample stats to create headlines on large issues would have seen any business sensored by the advertising standards authority.

    Until the Inherent corruption that comes with a lack of acountability is removed, it will be business as usual for the FCA sadly.

    As for Nic, do you deliberately choose to miss the point over and over again, or are you as ignorant as your reporting style indicates?

    • Steven Farrall 23rd July 2015 at 4:17 pm

      I agree – FCA = Has no democratic, legal or financial accountability and none of its functionaries have any skin in the game. It is the police, the judge, the jury, the executioner, the tariff setter all wrapped into one Orwellian institution. None of that, none of it, is acceptable in a free society.

  5. I was not aware that Otto Thoresen had told Wheatley to consider his position. Thoresen was in charge at Aegon when it went from being a reasonable provider to a dismal provider and paying large fines in the process. Aegon has still not improved on its reputation and Thoresen is lucky to be in any job at all. This must be the ultimate irony. However, I am surprised that Nic has missed the main point and that is that the FCA and its Chiefs should be subject to positive accountability probably by the TSC rather than the negative accountability of not being reappointed when the times comes. When the Government is looking to cut spending we cannot have a regulator effectively levying taxes by increasing charges almost without limit. Did we not lose a rather large colony some time ago because of taxation without representation?

  6. “Wheatley was completely right to talk of “shooting first and asking questions later”, another stick used to beat him last week.”

    No he was not. The inference from the remark was that the fundamental principle of English law-the presumption of innocence until proven guilty-was to be shelved.This was completely unacceptable.
    And what on earth is the point of mentioning the “irony” of the massive fines benefiting the Chancellor? I cannot believe the inference here either which appears to be maybe the Chancellor should have tolerated a situation he clearly felt unsatisfactory-the continuance of Wheatley filling the role after his contract expires- as he was pulling in the stash. Yeah, sure and is it a fair analogy to suggest say what you like about Mussolini but at least the trains ran on time? Wheatley was not there to get monies for the treasury and it is strongly rumoured Benito had other priorities than the train timetable.The FCA failed under Wheatley full stop.
    As for the attempted sting in the tail-few IFAs will worry about the long term effects on our clients- Ms Altmann is well capable of looking after herself

  7. Soren Lorenson 23rd July 2015 at 5:22 pm

    For me it is just Wheatley’s refusal to get a hold on his organisations costs that makes me smile when I see him gone. We can’t have ever spiralling regulatory and compensation costs for which we see absolutely no return. I know it’s not Wheatley’s fault that George Osborne has stolen the fine money, but he has not stood up and said it is wrong either (paradoxically if he had it would have been far harder for Osborne to fire him because he would have been backed by the industry).

  8. I don’t think it would have made a scrap of difference if Wheatley had tried to resist Osborne’s announcement that going forward the Treasury will confiscate all fines levied by the FCA. Osborne would have simply said I’m your boss and that’s the way it’s gonna be. What could Wheatley have done? He was hardly in a position to negotiate, was he?

  9. Its been cut and pasted on MM articles so many times I wont do it again; “The FCA is independent blah blah blah blah……..”

    What really matters is this -: we are ruled by an entity and government (in this instance) that flit in and out of accountability when it suits them, have complete deniability when it suits them, have sole charge in there own funds and funding, immunity from prosecution, short of lining the streets with hangings I really don’t know what would make people sit up and think, the FCA need to be controlled, just because you give the impression that you are a consumer champion (to use an, in phrase) and the decisions you make seem to be a vote winner;…. not many people will argue with a headlines such as; “bank gets fined …., or adviser gets jailed….., pensions are a rip off…. advisers are charging to much to make advice affordable,…. miss-selling this miss-selling that…., shoot first…. be afraid…..

    It doesn’t make it right !!

    To give Nic the benefit of the doubt, I believe in his heart of hearts he knows this, good journalists know better than any-one to read between the lines, they also know how to stoke a fire, raise a profile, create controversy, all these things engage the reader, and most will come to a knee jerk opinion one way another…….. job done !

  10. I wonder where Nic would stand if he’s had to put up with what the FCA have imposed on IFA’s with their ever increasing regulatory costs seemingly plucked out of thin air. We’re all supposed to be in the age of austerity, apart from the regulator that is. The figurehead of course is Wheatley and that’s where the buck stops, and that’s why he won’t get any sympathy from the adviser community. He’ll be wondering where it all went wrong? Tell him Nic, tell him, because as usual you’ll have all the answers.

  11. @ Julian Stevens: hi there. In answer to your query, yes I’ve read the response from Griffiths-Jones to Andrew Tyrie. I thought it was a reasonable one. No doubt others will want to pick holes in it, but a fair case was made as to why charges for the A13 category were what they were at the time and why a refund was not appropriate. I accept that’s just my opinion, however.

  12. Being fairly ancient I downhave lived through LUATRO FIMBRA SIB etc etc. In each case they have been shut down and reborn until we now have the FCA. ALthough each of these august bodies have made huge errors in regulation, pension misselling, endowment misselling, Keydata, Arch Cru, the list goes on and on. I do not recall hearing of any individual or department being fired, fined or suffering any form of penalty for their failures.
    We now have a situation where the Banks have stamped their feet and scared the govmt which has bowed to their pressure and fired the boss.
    My point is that is that until now everyone else has paid the price for the failure of the regulator rather than the individuals who got it wrong. The time has come for those responsible for failures in regulation to get fired.

  13. What it will mean as far as I can see is that the pretence is ended. Up till now the Govt has always maintained that the Regulator was independent. Those of us in the industry knew better. It was independent when it suited them – mainly to deflect blame or bad news. Now we will have it out in the open – the Regulator is the Government poodle from now on.

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