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