Cut the bank levy and lose Wheatley - those were the two conditions given to the Treasury by HSBC in return for staying in the UK. This week saw the Treasury finally cut Wheatley adrift and admit defeat.
It's been no secret that the big financial organisations in the city of London have been at odds with the FCA. In fact, we've met very few in the financial industry that have much good to say about the Financial Conduct Authority. The recent announcement from HSBC that they were considering leaving the UK due in part to regulatory burden - coupled with an immediate rise in their share price on that announcement - scared the Treasury so much that they had to take pragmatic action and cave in to their demands.
Talks between Treasury officials and HSBC in June hammered out HSBC's conditions for staying. There were a number of conditions, we are not aware of what the majority were but we do know that the two big conditions were a rollback of the bank levy (rolled back in July's budget) and the removal of Wheatley as head of the FCA (announced this week). In return, the Treasury requested that HSBC's board would recommend staying in the UK for 10 years. That will happen in Q4 of 2015.
We have to admit our own views on Martin Wheatley are somewhat confused, we have not made a minds up yet because of the differences we hear in public spin from politicians and what we hear in private from insiders. Our sources tell us that he argued against the Short Term High Cost Credit price cap, that it was a treasury decision and it was in the end, they that overruled his advice. From letters released under the Freedom of Information Act, this view seems to be founded in circumstantial evidence.
On the other hand the FCA is a bullying organisation that threatens those it regulates with penalties and sanctions without due process. We ourselves have come under those threats without any explanation. Someone at the top has to carry the can for that attitude.
We always warned that the FCA would take on one too many powerful enemies, that day seems to have come. There has to be some level of pragmatism, in our opinion the FCA hasn't shown a willingness to understand the needs of our industry. In a world where organisations can pickup and relocate with a click of a mouse. The Emperor has quickly found itself naked, without clothes and now without friends.