The curious case of why the head of Britain's finance regulator suddenly doesn't want the job anymore
So now the FCA is without clear leadership at a time when it is trying to combat criticism - again - that it is not doing its job properly.
The FCA is under fire from politicians and the public for reverting to "light touch" regulation of The City's banks, despite several scandals in which those banks have been caught cheating.
A lawyer and business lobby group representative told Business Insider recently that the regulator's failure to produce two recent reports on banking ethics rendered it "not fit for purpose."
The Financial Conduct Authority was first heavily criticised by the politicians and the public over its scrapping of two banking reviews within a matter of months. One was the major banking culture review announced in its business plan. The other centred on allegations that HSBC's Swiss private banking arm helped wealthy clients dodge tax between 2006 and 2007.
It was such a big deal that the chairman of the Treasury Select Committee, a panel of politicians that examines financial public bodies and banks, Andrew Tyrie MP, confirmed that he would be hauling in FCA CEO Tracey McDermott and Chairman John Griffith-Jones to explain themselves. "Each one [dropping the reviews] aren't crucial but cumulatively they do give the appearance of a weakening of a resolve and certainly the FCA's decision to drop its review into banking culture looks odd, after all it was in their business plan," said Tyrie.
She doesn't want the FCA CEO job
McDermott replaced Martin Wheatley - who was seen as an intrusive regulator- in September as acting FCA chief. She began a series of closed-door "culture" meetings with the banks, an indicator that the FCA is no longer interested in aggressively investigating potential wrongdoing at banks, at least in public.
"I have been at the FSA/FCA for 15 years and I remain extremely committed to, and passionate about, the important work we do. It has been, and remains, a privilege to lead this organisation," said McDermott in a statement.
"However, going through the recruitment process has made me reflect on what I want to do with the rest of my career."
"As a result I have decided that this is not the right job for me at this stage of my career. This was a decision taken after many months of careful thought and was not one that I took lightly."
Of course, she is totally entitled to change her mind. But a source close to the FCA told Business Insider today that only four days ago senior members of FCA told them that they expected her to remain as CEO.
This is especially acute because her positions that she previously worked in at the FCA were already filled last year. The FCA appointed Jonathan Davidson as its new Director of Supervision - Retail and Authorisations in July 2015. That was her role prior to taking up the acting CEO position. The role she held prior to that, head of enforcement and supervision, has also been filled. The FCA appointed Mark Steward, Director of Enforcement and Market Oversight while Barbara Frohn took up the Director of Risk and Compliance Oversight position in June last year.
"The decision of Tracey McDermott to quit the race to become permanent head of the FCA leaves the agency rudderless, as she was expected to be [George] Osborne's shoo-in as chief executive," said George Kerevan, a Scottish National party MP and another committee member to the Financial Times.
Will McDermott go to a bank?
To be clear - there is no public declaration of this and the FCA told Business Insider that there's "no response to the rumours - they are just that at this stage."
But it is a normal step if someone leaves a regulator. Take a look at her predecessors and counterparts.
Former Financial Services Authority (FSA) CEO Sir Hector Sants left to work at Barclays in 2012.
However, he resigned in 2013 due to stress and is now at management consultancy Oliver Wyman.
Christina Sinclair worked at the FSA and FCA for 18 years and then moved to Barclays to become the global head of compliance for wealth and investment management in 2013 after serving as the acting head of retail.
The CEO of the Financial Ombudsman Services, Natalie Ceeney, jumped ship and joined HSBC as its head of customer services in 2013. As of this month, she announced she is leaving to become the CEO of HM Courts and Tribunal Service.
So while we don't know what is going to happen with the FCA or who is going to take over, we wouldn't be surprised if McDermott left the FCA after a long career there for a job at a bank.