Standard Chartered hires former boss of the Financial Conduct Authority to oversee regulation. Here's why that's troubling
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Version 0 of 1. The former acting boss of Britain’s financial watchdog has taken a lucrative role overseeing regulation at a bank just seven months after her departure from the organisation. With her appointment at Asia focussed Standard Chartered, Tracey McDermott has become the latest in a long line of senior public officials who have secured lucrative employment in the private sector. Her job official job title is head of corporate, public and regulatory affairs and hiring her looks like a smart move on the part of Stan Chart. Chief executive Bill Winters, who himself served on the the the Vickers Commission that led to the ring fencing of UK retail banks, is trying to pull off a turnaround at the bank but his efforts are being complicated by numerous regulatory entanglements, including one in the UK. There could hardly be a better person to have on board to help him deal with the fall out from them. The Financial Conduct Authority has sought to nip any problems Ms McDermott’s appointment might present in the bud by publishing a letter outlining how the FCA’s current chief executive Andrew Bailey expects the role to work vis Standard Chartered’s dealings with the FCA. It says that Ms McDermott will not share any confidential information with her new employer, will not appear before the FCA, and will have to recuse herself from matters associated with the FCA and any disciplinary actions against Standard Chartered when these are discussed by the bank. From what I know of Ms McDermott, I would imagine she will comply with that. So should the bank, given the high priority Mr Winters has given to improving its conduct. Moreover, it’s hard to begrudge Mr McDermott the chance to make a few quid given what she had to deal with at the FCA. She found herself running the organisation after her old boss Martin Wheatley was elbowed out by former Chancellor George Osborne, ostensibly for being too tough on the banks. Mr Osborne then sprung a surprise by saying she’d withdrawn from the recruitment process for Mr Wheatley's permanent successor in the midst of a BBC interview, three weeks before moving Mr Bailey across from the Bank of England. It was a shabby way to treat someone who had been catapulted into a difficult situation. Ms McDermott was faced with the challenge of steadying the ship and pulling morale off the floor at an organisation in the midst of a fierce debate over its role. It had also taken a lot of heat over a briefing with the Daily Telegraph that went badly wrong. Needless to say, Mr Osborne didn't hang around after being booted out of Number 11 Downing Street by Theresa May, taking a job with a six figure salary advising fund manager BlackRock, on top of what ought to be a full time role as a back bench MP, with unseemly haste. But there is still a principle at stake when it comes to the leaders of the FCA. While Ms McDermott could never be accused of having taken a soft line with an eye on future employment opportunities while in post - she presided over the regulator's investigations into the Libor and Foreign Exchange trading scandals that led to record fines - others might be tempted to do so if they thought it might clear the path to a seven figure pot of gold at the end of the rainbow. And while Ms McDermott can be expected to keep her end of the bargain with Mr Bailey, others might not be so ethical once ensconced in the private sector. Typically, the chief executive of the FCA has a 12 month notice period. Senior lieutenants get only six months, and that applies to Ms McDermott because she was never made the watchdog’s permanent chief executive. To avoid any similar situations, the 12 months should apply to department heads as well as to the organisation’s leader. If that means they have to be paid a bit more, so be it. Meanwhile, when Mr Bailey has finished his musing on the FCA’s future mission, he and his colleagues might put their minds to setting down some guidelines that formalise what he said he wanted to see in his letter to Standard Chartered concerning Ms McDermott. That should help to deal with similar situations in the future. The FCA will not be part of a forthcoming Parliamentary report into the to an fro of top people between the public and private sectors, which is expected to be highly critical. Perhaps it should have been. I wouldn't be at all surprised if Andrew Tyrie at the Treasury Committee had something to say about all this in due course. |