The Financial Conduct Authority has still not learnt from last year’s calamitous “pre-briefing” of insurance market reforms, and its chief executive, Martin Wheatley, is still in denial about what went wrong, a committee of MPs warns today.
The Treasury Select Committee uses its final report of this Parliament to fire a warning shot at the watchdog over the March 2014 debacle in which the FCA pre-briefed a newspaper about a forthcoming insurance sector review, causing market panic.
Andrew Tyrie, the committee’s chairman, said the FCA had not faced up to the “wider problems” identified in the external report on the affair by Simon Davis of the legal firm Clifford Chance.
“The FCA needs to do more to satisfy Parliament, and the public, that it has understood the implications of this episode,” Mr Tyrie argued.
The report calls on the watchdog to implement an extensive review of its standards and culture, reporting the results in the next six months.
The turmoil a year ago was triggered by a report in The Daily Telegraph on 28 March of an impending review of the pensions market. The paper published comments attributed to Clive Adamson, the FCA’s director of enforcement, announcing a review of old life insurance policies sold.
FCA officials approved the quotes. But when the market opened at 8am on the same day, shares in insurers tanked as investors interpreted the comments as implying every single historic policy was subject to review, potentially costing the industry billions.
It took several hours for FCA directors to respond. A statement clarifying the scope of the review was not issued until 2.27pm. “The FCA’s reaction was seriously inadequate,” the report said.
Mr Wheatley still maintains that the watchdog’s communications strategy was not to blame, the select committee points out today. It says this stance is “wrong”.
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