City watchdog ‘less stable’ after ousting

THE chairman of the Financial Conduct Authority has admitted the sudden departure of its chief executive has made the regulator ‘less stable’.

Giving evidence to the Treasury Select Committee, John Griffith-Jones revealed the City watchdog had been rocked by the Chancellor’s decision not to renew Martin Wheatley’s contract.

Wheatley is said to have lost George osborne’s confidence after the FCA’s bungled leak about a probe into old pensions policies in April last year caused shares in insurance firms to plunge £3bn.

Andrew Tyrie, the chairman of the Treasury committee, yesterday described the FCA’s breach of its own listing rules – preventing the leak of market-sensitive information – as a ‘catastrophe’ and asked whether Griffith- Jones was confident he has now ‘got the FCA into shape’. Griffith- Jones said he was ‘reasonably confident’ but that ‘it is certainly not the case that the job is finished’.

He added that the City watchdog was left with a ‘considerable number’ of new staff who were appointed by Wheatley. He said: ‘I would say that we were less stable than you might ideally wish.’

Wheatley stepped down in September after he was told his contract would not be renewed. He and three other executives were stripped of their bonus after the bungled leak.

An investigation into the debacle by a partner from Clifford Chance found that the FCA has ‘created a false and disorderly market’.

McDermott admitted the Treasury’s decision to drop the ‘guilty until proved innocent’ rule would make the FCA’s job more difficult. She said it would not reduce the FCA’s appetite to investigate executives but she said removing the requirement for bosses to prove they took reasonable steps to avoid a bank’s collapse ‘may make investigations slightly more onerous’.