The curious case of why the head of Britain’s regulator suddenly doesn’t wanting the job anymore

Tracey mcdermott
Tracey McDermott is the acting CEO of the FCA. FCA

Britain’s regulator is having a bad start to the New Year and now its acting CEO said she doesn’t want the top job.

The Financial Conduct Authority is under fire from politicians and the public for reverting to “light touch” regulation when it comes to the banks.

And Tracey McDermott, the acting CEO of the FCA, confirmed she doesn’t want the job full-time. A lawyer and business lobby group representative told Business Insider that the regulator was “not fit for purpose.

So in other words, the FCA is without clear leadership and is under scrutiny for not doing its job properly.

The Financial Conduct Authority was first heavily criticised by the politicians and the public over its scrapping of two banking reviews within a matter of months. One being a major banking culture review that was even announced in its business plan and another centring around allegations that HSBC’s Swiss private banking arm helped wealthy clients dodge tax between 2006 and 2007.

It was such a big deal that t
he chairman of the Treasury Select Committee, a panel of politicians that examine financial public bodies as well as banks, Andrew Tyrie MP, confirmed that he would be hauling in FCA CEO Tracey McDermott and Chairman John Griffith-Jones to explain themselves. “Each one [dropping the reviews] aren’t crucial but cumulatively they do give the appearance of a weakening of a resolve and certainly the FCA’s decision to drop its review into banking culture looks odd, after all it was in their business plan,” said Tyrie.

She doesn’t want the FCA CEO job

McDermott replaced Martin Wheatley — who was seen as an intrusive regulator — in September as acting FCA chief and has begun closed door “culture” meetings with the banks, which indicates that the FCA is no longer interested in aggressively investigating potential wrongdoing at banks, at least in public.

But then McDermott dropped a bombshell that came at a curious time — she doesn’t want the CEO job. I have been at the FSA/FCA for 15 years and I remain extremely committed to, and passionate about, the important work we do. It has been, and remains, a privilege to lead this organisation,” said McDermott in a statement. “However, going through the recruitment process has made me reflect on what I want to do with the rest of my career.” “As a result I have decided that this is not the right job for me at this stage of my career. This was a decision taken after many months of careful thought and was not one that I took lightly.” The announcement came as the furore around the dropping of the banking reviews grew. Of course, she is totally entitled to change her mind and as she said, it was only until going through the recruitment process that she decided it wasn’t the job for her. But a source close to the told Business Insider today, only four days ago senior members of FCA told them that they expected her to remain as CEO. This is especially acute because her positions that she previously worked in at the FCA are already filled last year. The FCA appointed Jonathan Davidson as its new Director of Supervision — Retail and Authorisations in July 2015, to her role prior to taking up the acting CEO position Even the role she held prior to that, head of enforcement and supervision, has been filled. The FCA appointed
Mark Steward, Director of Enforcement and Market Oversight while Barbara Frohn took up the Director of Risk and Compliance Oversight position in June last year.

“The decision of Tracey McDermott to quit the race to become permanent head of the FCA leaves the agency rudderless, as she was expected to be [George] Osborne’s shoo-in as chief executive,” said George Kerevan, a Scottish National party MP and another committee member to the Financial Times.

Will McDermott go to a bank?

So the markets are wondering at the moment is what she is going to do next. Market chatter heard by Business Insider is that it is entirely possible that she is considering leaving to get a job at a bank.

To be clear — there is no public declaration of this and the FCA told Business Insider that there’s “no response to the rumours — they are just that at this stage.”

But it is a normal step if someone leaves a regulator. Take a look at her predecessors and counterparts. Former Financial Services Authority (FSA) CEO Sir Hector Sants left to work at Barclays in 2012. However, he resigned in 2013 due to stress and is now at management consultancy Oliver Wyman. Christina Sinclair worked at the FSA and FCA for 18 years and then moved to Barclays to become the global head of compliance for wealth and investment management in 2013 after serving as the acting head of retail.

While, the CEO of the Financial Ombudsman Services, Natalie Ceeney, jumped ship and joined HSBC as its head of customer services in 2013. As of this month, she announced she is leaving to become the CEO of HM Courts and Tribunal Service.

So while we don’t know what is going to happen with the FCA or who is going to take over, we wouldn’t be surprised if McDermott left the FCA after a long career there for a job at a bank.

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