McCarthy gained notoriety in the industry for his speech to the Gleneagles Savings & Pensions Industry Leaders’ Summit in September 2006 when he slammed the financial services sector and called for tougher regulation.
He said: “My contention is that we have a system which serves neither the producer of the services nor the consumer of the services. It is doubtful whether it serves the intermediary either.
“I assume that the provider of the retail financial service wants over time to associate his or her brand with qualities of reliability, trustworthiness, performance and to establish and develop a long-term relationship with customers, so that they can benefit from those parts of the customer’s life when he or she is accumulating wealth. If this is the aim, what we have fails miserably.”
Cicero Consulting director Iain Anderson says McCarthy asked questions about the effectiveness of the regulatory regime that should have been asked much earlier.
He says: “McCarthy took the FSA to a different level in terms of principle-based regulation but unfortunately the Northern Rock debacle may be the thing that people remember about his tenure.”
McCarthy started his career in finance in 1985 when he joined Kleinwort Benson as director of corporate finance.
In 1989, he joined Barclays’ investment banking arm, BZW, as managing director and deputy head of corporate finance. He became chief executive officer of Barclays Bank group operations in Japan, before moving to head the bank’s businesses in North America.
McCarthy left Barclays to be director-general of gas regulator Ofgas in 1998. When the new energy super-regulator Ofgem was set up in 1999 he became chief executive and then executive chairman in 2000. He joined the FSA in September 2003.
Temple Bar IFA managing director Simon Mansell says McCarthy should have been prepared to deal with the Northern Rock crisis, considering his wide experience in the banking world.
But he says McCarthy and the FSA chose to largely ignore the banking sector. He says: “They did not understand the intermediary market and, with a degree of arrogance, ignored the banking sector to the cost of everyone.”