FCA guilty of 'dereliction of duty' in media blunder

clock

The Financial Conduct Authority (FCA) is set to be heavily criticised over its decision to leak details of an upcoming insurance probe to a national newspaper, inadvertently causing shares in several major life companies to plummet, according to reports.

In its final report into the events a year ago, set to be published this week, the Treasury Select Committee (TSC) will accuse the financial services watchdog of a "dereliction of duty", Sky News reports, citing an unnamed source.

The broadcaster said John Griffith-Jones, chairman of the FCA and Martin Wheatley, chief executive of the FCA will be singled out for criticism.

In March 2014, the regulator agreed to brief a national newspaper on details of an upcoming probe into "long-standing" customers in life insurance-type products.

By seeking early coverage of its plans, which were due to be announced several days later, the FCA hoped the scope and objectives of its review would be better understood.

However, the leak of market sensitive information prompted significant falls in the share prices of several life companies, including Aviva, Prudential and Legal & General.

Shortly afterwards, Andrew Tyrie, chairman of the TSC said the regulator may have been guilty of an "extraordinary blunder" by allowing its actions to create a disorderly market in shares.

An independent report by law firm Clifford Chance, ordered by the FCA and published in December last year, concluded the regulator's strategy of leaking news was "high risk" and inadequate.

Simon Davis, partner at Clifford Chance described the FCA's actions as well-intentioned but ultimately "high risk, poorly supervised and inadequately controlled".

Davis's report also revealed staff working in the FCA's supervision division warned the regulator not to brief the newspaper. To do so, they said, would pile more "misery" on life insurers already reeling from announcements made at Budget 2014 related to pensions ‘freedom'.

Sky News said the TSC report would echo many of Davis's criticisms.

More on PMI

Aviva creates cancer care support service for PMI customers
PMI

Aviva creates cancer care support service for PMI customers

In partnership with Macmillian Cancer Support

Hemma Visavadia
clock 28 April 2022 • 2 min read
handl Group expands UK presence with IPRS Group acquisition
PMI

handl Group expands UK presence with IPRS Group acquisition

‘Biggest acquisition handl Group has completed to date’

Hemma Visavadia
clock 20 April 2022 • 1 min read
National Friendly launches 'Extensive' PMI proposition
PMI

National Friendly launches 'Extensive' PMI proposition

Includes unlimited cover

John Brazier
clock 12 April 2022 • 1 min read

Highlights

First episode of The COVER Review goes live!

First episode of The COVER Review goes live!

New monthly programme

John Brazier
clock 21 April 2022 • 1 min read
The Rising Stars of Protection: Adrian Benjamin

The Rising Stars of Protection: Adrian Benjamin

"Getting into the insurance industry is very difficult, I had to fight my way to get in"

Hemma Visavadia
clock 20 April 2022 • 6 min read
Where protection meets sustainability

Where protection meets sustainability

"Being a sustainable business means more than just meeting climate targets"

Hannah Godfrey
clock 19 April 2022 • 7 min read