FCA scraps bonuses after insurance blunder

The City watchdog, the Financial Conduct Authority (FCA), is to cancel bonus payments for several senior executives involved in the mishandling of a review of insurers' businesses.

According to the Financial Times FCA executives will have their bonuses cancelled and be criticised in a report to be published tomorrow into the botched announcement of a probe into insurers’ 'closed books'.

On 28 March the Daily Telegraph published an interview with the FCA's director of supervision, Clive Adamson, in which he said the regulator was looking into life insurers' legacy businesses and policies dating back to the 1970s. The story provoked panic among investors and saw billions wiped from the value of companies such as Phoenix (PHNX 

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 ) and Resolution, now Friends Life Group (FLG

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 ), until the FCA published a statement clarifying the terms of the review.

Following protests by insurers and investors, the FCA announced an investigation by Simon Davis, a senior commercial litigation partner at Clifford Chance. His report is published tomorrow.

Ahead of his findings all nine members of the FCA executive committee had their bonuses put on hold.

The FT said it was not clear whether FCA chief executive Martin Wheatley would lose his bonus and said the FCA had declined to comment. 

Yesterday the FCA revealed it was restructuring its organisation after admitted its supervision of small firms, mostly independent financial advisers, was 'under strain'.

It also confirmed Adamson as well as Victoria Raffe, director of authorisations and Zitah McMillan, director of communications would leave the organisation.

Meanwhile, The Times has revealed that the FCA has set aside £180,000 for staff Christmas parties. The regulator has a ‘fun fund’, which sets aside £60 for each member of its 3,000 strong staff, in aid of an annual event, which is normally a Christmas party, the paper said.

The FCA’s spending has not yet hit the heady heights of its predecessor, the Financial Services Authority (FSA), which in 2007 budgeted over £270,000 on staff entertainment.