Financial watchdog has not learned lessons from insurance debacle, say MPs
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Version 0 of 1. The Financial Conduct Authority has still not learned the lessons 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 blast a warning across the bows of the watchdog in relation to the March 2014 debacle in which the FCA pre-briefed a newspaper about a forthcoming insurance sector review, causing market panic. Andrew Tyrie, the TSC’s chair, said the FCA had not faced up to the “wider problems” identified by the December external report on the affair by Simon Davis of Clifford Chance. “In order for the FCA to put this episode fully behind it, it will have to examine these issues in detail in the months ahead” Mr Tyrie said. “The FCA needs to do more to satisfy Parliament, and the public, that it has understood the implications of this episode.” It 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 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 into old life insurance policies sold. FCA officials approved the quotes. But when the market opened at 8am on 28 March 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 to market reaction. A statement clarifying the scope of the review was not issued until 2.27pm. “The FCA’s reaction was seriously inadequate and fell short of the standards expected of those it regulates,” the report said. In response the FCA announced the bonuses of four FCA directors, including Mr Wheatley who was due a reward of up to £115,000, would be blocked. Mr Adamson, who was criticised in the Davis report, has since left the watchdog. But the TSC points out today that Mr Wheatley still maintains that the watchdog’s communications strategy was not to blame for the debacle. The Committee says this stance is “wrong” and that it is concerned that “Mr Wheatley still does not acknowledge this”. |