Clive Adamson, the much-vilified head of supervision at the Financial Conduct Authority, has quietly slipped away from his post, according to very recent changes on the regulator's website.

As this publication predicted, Tracey McDermott has moved from the enforcement area to fill Adamson's shoes. Georgina Philippou has taken over the enforcement brief temporarily as a holding operation while Wheatley does his best, according to rumour, to recruit Mark Steward, the executive director of and head of enforcement at the Hong Kong Securities and Futures Commission, to move over to the UK. Steward is only likely to agree in exchange for a princely sum.

Enough rope

Adamson's humiliation began in January last year in front of the Treasury Committee, which the House of Commons appoints to investigate goings-on at the Treasury and, among other bodies, the Financial Conduct Authority. Jesse Norman MP grilled Adamson mercilessly about his decision in 2010 to appoint the Rev Paul Flowers, the 'crystal Methodist' who nearly bankrupted Co-Op Bank while on heroin and ketamine. The conversation went like this.

Norman: You failed to detect his unsuitability. You let him through and Mr Hardie, who was one of the people evaluating Mr Flowers, then goes to work as a non- executive director of that institution. That is a question. I am wondering if you are going to say “yes” or “no” to that.

Adamson: That is factually correct.

Norman: Do you approve of this revolving door in this case?

Adamson: I think it is quite acceptable, particularly as Mr Hardie’s role was as a senior adviser. He was not a member of the executive. I believe he stepped down from his role before he was appointed as a non-executive director of the Co-op.

Norman: You do not detect any possibility of a conflict of interest there, that somehow a person who has been in judgment on Mr Flowers might then be taken on to this institution almost certainly at the behest of Mr Flowers?

Adamson: There is always a risk of a conflict of interest as people move from the regulator to the regulated. We are very careful about managing those conflicts...

Norman: It seems to me the problem is this. Either you saw that Flowers was financially incompetent or you did not.

Adamson: We did.

Norman: Which was it? You saw that he was financially incompetent?

Adamson: As I said earlier, we agreed with him and he agreed himself that he did not have sufficient banking experience.

Norman: Good, okay. The way you attempt to handle this is by putting in place safeguards, notably Mr Baker-Bates and Mr Davies on the board as the financially competent people. You say, “This man is incompetent but the good news is we have some financially competent people on the board alongside him”, except it turns out that on the one substantive issue where their financial competence is clearly called into play and on which they disagree, in a context in which boards very rarely are allowed to maintain disagreements, in which unanimity is generally required for a decision to be taken, they did not agree. This did not raise any alarm bells because you did not know about it. In other words, the system that you created to guard against the incompetence of Mr Flowers spectacularly failed as well.

Adamson: I do not quite agree with that. As I said earlier, the issues that Mr Baker-Bates raised were precisely the issues that we wanted satisfaction about before we would consider the merger.

Norman: I am sorry, could you repeat that?

Adamson: The issues that Mr Baker-Bates raised about the capacity of the firm to take on something else were precisely the issues that were raised with the firm that both regulators would need to be satisfied about to consider that merger.

Creating a disorderly market

Adamson's 'pièce de résistance', however, came when he did what he had spent the last few years excoriating others for - creating a disorderly market. In this case he let slip that an FCA investigation into life companies was going to take place, wiping billions of pounds off the share prices of large insurance carriers by the beginning of the working day. Once he realised his mistake, Adamson seems to have frozen up and not told his CEO, Martin Wheatley, who himself was so slow to react to the crisis that only a mollifying statement to the press in the early afternoon helped to soothe the markets a little. Wheatley himself, who has ruled out resigning, is expected to face the Treasury Committee himself at some stage this year.

Baying for blood

The FCA's non-executive directors then commissioned an up-market law firm, which they no doubt saw as a 'safe pair of hands', to investigate the matter but it did not report for months, perhaps because the directors wanted to wait for the hue and cry to die down. Eventually it was revealed that Clifford Chance had done the job, and even though the Davis Report was sober and suitably late - it came out in December - it contained much that was very damning. During the summer, by which time people were baying for blood, a compliance consultant said to this publication: "Surely if either of these matters (i.e. either the Paul Flowers débâcle or the media leak) were found at a regulated firm, the FCA under its new 'culture' bandwagon would be demanding blood. Nothing has since been heard about the unnamed law firm’s investigation, which should surely be finished by now. If it were a '166 request' (named after section 166 Financial Services and Markets Act 2000) the FCA would be demanding answers. Where are ours? One rule for them and one for us, I hear you say. Why should they have anonymity when they now publish disciplinary matters before they are final? Someone should fall on his sword."

On one day in December, City AM's front page article put it more succinctly when it quoted a senior insurance executive, probably from one of the firms whose share price Adamson had lain waste, saying: "We’d have been put in jail for something like this."