QUEUES are forming to see The Big Short, the new movie about how a select few buccaneers in the financial markets made gazillions out of the great banking crisis that bankrupted nearly everybody else. Don’t think we are talking past history.

The clock is already ticking towards the next big financial meltdown.

Perhaps not this year, if China’s rickety “shadow” banking system staggers on. After all, the Chinese economic miracle was based on running up

$26 trillion of internal debts, a good whack of which are duds. But one thing is as certain: none of the banking reforms that were rushed into place after the 2007-08 credit crunch have done anything to prevent the next crash appearing eventually.

I’m more convinced of this than ever having sat through last week’s Treasury Select Committee interrogation of the high heid yins of the UK’s own chief bank regulator, the Financial Conduct Authority (FCA).

The FCA opened for business in 2013 with the remit to maintain the “integrity” (a weasel word for honesty) of the UK’s financial system. In other words, the FCA is the policeman of the financial system. That should be good news. After all, the big four UK high street banks have racked up more than £50 billion in fines since 2008, for diddling customers, mis-selling, rigging interest rates and skimping investment on decent IT systems that don’t break down when you need them.

Why didn’t we have an FCA before? Actually we did. It was called the Financial Services Authority (FSA), the brainchild of Gordon Brown back in 2001. However, the old FSA was AWOL when queues started forming outside branches of Northern Rock in 2007, to get their money out.

Somehow the FSA never noticed the runaway financial bubble and ultimate financial implosion caused by the new-fangled credit default swaps and sub-prime loans. Never mind the wholesale grand larceny that banks were inflicting on their customers.

The causes of the FSA’s serial incompetence are too many to repeat here. Suffice it to say that Gordon Brown broke up the regulatory system into pieces, so no-one knew who was responsible for what. That included the FSA bureaucracy, who blamed everyone and everything for the crash except their own negligence.

Enter the shiny new Financial Conduct Authority in 2013, with a tough new boss called Martin Wheatley. Unusually for a bank regulator,Wheatley was not an ex-banker. He arrived at the FCA after a stint as regulator of the Hong Kong stock market. His tenure there was marked by aggressive enforcement of anti-insider-trading rules. It did not make him popular.

At the FCA, Wheatley imposed record fines for misconduct. The man who appointed him – Chancellor George Osborne – could bask in reflected glory and the knowledge that the new Tory-LibDem Government was being tough on the banks.

In 2014, Wheatley signalled an even tougher regulatory environment: if a new scandal occurred, senior managers would be subject to a reverse burden of proof. Unless they could actually prove they had nothing to do with misconduct, the nearest open prison would beckon.

This went down like a lead balloon in the City. Not only was Martin Wheatley fining them for diddling customers, he seemed determined to send the City’s finest to the clink. Osborne soon found himself under pressure. First a string of big banks, starting with HSBC, hinted they would move their headquarters from London unless George reduced corporate taxes.

Then the army of bank PR staff who infest Westminster unleashed an avalanche of criticism against the new regulatory regime, claiming it was hurting bank “incentives”.

Something had to give. In June last year, the Chancellor delivered a speech at the Mansion House dinner, the annual bash for the 400 or so City elite. The audience expected another lecture on their failures. Instead, Osborne launched into a not-so-veiled attack on Martin Wheatley, saying: “Simply ratcheting up ever-larger fines that just penalise shareholders, erode capital reserves and diminish the lending potential of the economy is not, in the end, a long-term answer.”

THE next month, Osborne gave Wheatley his P45.

His interim replacement as boss of the FCA was Tracey McDermott, who was hauled before the Treasury Select Committee last week along with the organisation’s chairman, John Griffith-Jones. On becoming interim chief executive, McDermott immediately reversed the take-no-prisoners policy of the Wheatley era. She intimated the possibility of a deadline for PPI claims, which instantly boosted the value of shares in Lloyds Banking Group, which has the biggest exposure. And she cancelled a thematic review of bank culture.

On the latter, her excuse to the Treasury Committee is that the FCA will examine the business culture of individual banks instead. Yet it won’t be issuing any “best practice” guidance, so why bother? Besides, I got a limp response from McDermott when I queried the FCA’s flexible attitude to the questionable business culture of one bank in particular – HSBC. Last month the FCA was given a dressing-down from the Office of the Complaints Commissioner, as a result of its mis-handling of public complaints about HSBC.

The Commissioner said the FCA was “negligent” and “defensive”, and that it had even tried to “shift [the] blame” on to the original whistle-blower, Nicholas Wilson.

McDermott has now withdrawn her application to become permanent head of the FCA. Whether this has anything to do with the welter of public criticism the FCA has received as a result of its new, kid-gloves attitude towards the banks, I leave to you.

A look at McDermott’s career is instructive. She was a lawyer with the previous FSA from its inception. But wasn’t the FSA abolished and replaced by the FCA? Yes, but the majority of staff working at the new FCA were transferred from … er, the FSA. Including McDermott, who switched from being head of enforcement at the FSA to doing the same job at the supposedly new regulator.

What about John Griffith-Jones, the FCA’s chairman? He is an accountant who spent most of his career with a firm called KPMG, latterly as its chairman. KPMG was the official auditor for a string of banks that got into trouble, including HBOS. Yet KPMG gave them a clean bill of health. Talk about conflicts of interest. Fortunately, Griffith-Jones has also announced he is quitting the FCA.

Meanwhile, Chancellor Osborne has quashed the idea of a reverse burden of proof for errant bankers and slashed the bank levy. Whether that is enough to convince HSBC to keep its HQ in London we will find out next month. Osborne and Griffith-Jones (his last duty at the FCA) are now interviewing for Tracey McDermott’s successor. One name in the frame is Greg Medcaff, an Australian ex-banker – though several Bank of England insiders have also been mentioned.

Whoever gets the job will have a hard sell to prove the FCA’s independence and integrity. The agency is now seen as a prisoner of George Osborne’s attempt to buy off the banks. One modest solution is for the Parliamentary Treasury Select Committee to be given a veto over the appointment of both the chairperson and chief executive of the FCA. Without that, the FCA is merely George Osborne’s political poodle.