In an abrupt statement yesterday that took the City by surprise, the Financial Conduct Authority said that Martin Wheatley would be standing down as chief executive in September.
His contract had been due for renewal next April, but the chancellor told Mr Wheatley this week that his reappointment would not be approved, triggering his resignation.
Although Mr Osborne thanked him for his contribution, he said that “different leadership” was required at the regulator, The Times reports.
Mr Wheatley, 56, who is expected to attend the authority’s annual meeting on Wednesday, will stay on in an advisory capacity until the start of next year. He will depart with a £490,000 payoff, equal to a year’s pay.
Tracey McDermott, the director of supervision, will become acting chief executive while the Treasury searches for a new chief executive.
The Treasury said that it would look worldwide for a person who was “passionate about protecting consumers, promoting competition and completing the job of cleaning up the City, so it is the best-regulated market in the world”. Ministers may have to pay a significant sum if they want to recruit a high-flying regulator able to navigate successfully the powerful forces of the industry, politicians and other stakeholders.
Mr Wheatley’s departure was seen as further evidence of a softening towards banks by the chancellor. Mr Osborne watered down the unpopular balance sheet levy in last week’s budget and said that regulators should focus on keeping London as an attractive global financial centre.
To reinforce its desire for a different direction, the Treasury is planning to recruit new non-executives to the authority’s board starting in April.
It is believed that Mr Osborne wants a new chairman to replace John Griffith-Jones once the chief executive’s seat has been filled.
Mr Wheatley, a tough operator who led the authority from its inception in 2013, has become increasingly unpopular in the financial services industry. As well as some high-profile gaffes, there has been widespread criticism of his approach, with one senior figure saying that he was “too consumerist and vindictive”.
There also have been frustrations with his apparent unwillingness to meet senior executives to discuss issues, as well as what is seen by some as poor internal management of the regulator, with a large number of people reporting directly to Mr Wheatley.
Big banks have been frustrated over the response to the mis-selling of payment protection insurance, which has generated a multibillion-pound industry for claims management companies bringing false cases against lenders.
However, Paul Lynam, chief executive of Secure Trust Bank, a challenger lender, suggested that Mr Wheatley had made himself unpopular by taking on big banks and had fallen victim to their “sheer lobbying power”.
The authority was created by the coalition government after the “light touch” regulation of its predecessor, the Financial Services Authority, was discredited during the financial crisis of 2007 to 2009, when several banks had to be saved from collapse with taxpayer bailouts.
