Culling of the consumer champions

Champagne corks will no doubt be popping all around the City tonight, following the news that the Financial Conduct Authority's chief executive Martin Wheatley has been given the sack.

In fact, it's been a good month for the banks all round. Last week, Barclays' do-gooding chief executive Antony Jenkins was fired for spending too much time on cultural change, and not enough on making cold hard profit. Days earlier, banks were celebrating a promise from the Government that the bank levy would be cut back dramatically over the next few years - just months after the Chancellor had promised completely the opposite.

Power shift

These events may not be linked, but they do signal a shift in the power struggle between regulators, government, shareholders and customers. And if you like conspiracy theories, I'll have a go at stringing all of these together at the end of this piece.

But first back to Wheatley. Like Jenkins, the head of the FCA talks passionately about change in the financial services sector. And he has much to show for his four years in the job. When the government announced that it planned to split the old City regulator in two - to create the new Prudential Regulation Authority and Financial Conduct Authority - it sounded like political posturing. But the FCA has proven itself to be a completely different beast to its predecessor - much braver, much more proactive and most importantly, much more effective.

While there may seem to have been no end of financial scandals emerging under the FCA's watch, it's fair to say that at least part of this perceived increase is because of the regulator's hyperactivity in recent years. When crime reporting gets better, the numbers go up. But that doesn't always mean there's been an increase in crime.

Wheatley's impressive legacy

Don't get me wrong, the FCA has not finished the job of cleaning up financial services. But if you look at our retail banks compared to four years ago, it's fair to say that most of the worst excesses have been eliminated. Not so long ago, banks were hitting people with hundreds if not thousands of pounds of charges for busting their overdraft limit. Caps are now in place and charges have been reduced dramatically.

Mis-selling has all but evaporated - at least on a mass market scale. And there is even now a team of people in the FCA whose job it is to hunt down the next mis-selling scandal before it happens  - many of whom are ex-journalists.

At the same time, a litany of thematic reviews have started to shine the light on other problems and these have been effective at starting to drive change - not just in banking, but in the world of insurance too. All of this is a million miles away from the ineffective, reactive approach of the FSA.

Banks play their joker

It's not clear why Wheatley has been ousted. George Osborne's statement that it's time for "different leadership" gives away very little. But it's hard not to speculate that Wheatley's head is part of a package of concessions that Osborne has given to the banking industry alongside a promise to cut their banking levy.

While HSBC has been threatening to move its headquarters out of the UK for years, it would seem that this time it was more than an empty threat. Facing the same threats from Standard Chartered, the government started to worry about job losses, taxes and the strength of the City without these key playes - and as a result has allowed itself to be backed into negotiating a series of concessions for the industry in a bid to persuade Standard Chartered and HSBC to stay.

It's harder to tie Antony Jenkins to all of this - and the timing of his departure may well be a coincidence. But for the conspiracy theorists amongst you, I'll float the idea that those who ousted Jenkins were given a heads up that the FCA would soon start going a bit easier on the banks. Under new leadership, cultural change may not be pushed as hard as it was - and promises were made to ensure that the regulator is less antagonistic towards those it regulates.

Time will tell. And of course Tracy McDermott - who is to take over as acting CEO while a permanent replacement is found for Wheatley - is no pussycat. As head of enforcement, she's overseen a period where the regulator has handed out more fines than ever before. Sadly, however, I think it's highly unlikely she'll get to keep the job.

Whether the conspiracy theories hold up or not, the plates are definitely shifting - and at the moment, it's hard to see how consumers ar going to emerge as winners.