Andrew Bailey named Financial Conduct Authority chief executive

The Chancellor surprised the Square Mile as he made banking supremo Andrew Bailey head of the main City regulator, the Financial Conduct Authority.

Bailey, a deputy governor of the Bank of England and head of Prudential Regulation Authority, will move to the financial watchdog as soon as he has been replaced at the Bank.

The Chancellor sacked Bailey’s predecessor Martin Wheatley last summer after they clashed over how the regulator should be acting towards banks, with the Chancellor demanding a more conciliatory approach to that seen since the financial crisis of 2008.

Tracy McDermott, who has been acting head of the FCA since Wheatley’s departure but recently ruled herself out of the full-time job, will stay on until Bailey arrives.

George Osborne said: “We have cast the net far and wide for this crucial appointment and, having led the Bank of England’s response to the financial crisis, Andrew is simply the most respected, most experienced and most qualified person in the world to do the job.”

The five-year appointment of Bailey came as a surprise because headhunters appointed by the Treasury had drawn up a short list which was reportedly made up of the heads of foreign financial regulators, including those in Australia and Switzerland.

It also follows accusations that the Bank had put pressure on the FCA when it dropped a wide-ranging report into the banking culture this month.The Bank denied that.

Osborne said: “His appointment is an important next step in the establishment of the FCA as a strong regulator, independent of government and industry.”

As head of the PRA, the reformed regulator of banks, Bailey oversaw the near collapse and rescue of Co-op Bank and is seen by senior bankers as a pragmatic but tough practitioner.