Simon Davis, a senior commercial litigation partner at global law firm Clifford Chance, has been appointed to conduct the independent investigation into the handling of the FCA’s botched announcement of a major probe into long-standing life and pensions policies.
The inquiry will examine the events leading up to and following the publication of the FCA’s intention to review during 2014 certain long-term life assurance products on 27 and 28 March on the Telegraph website and the Daily Telegraph newspaper.
The report into the planned review, which was mentioned in the FCA’s business plan published on 31 March, was based on a private briefing given by director Clive Adamson.
Following the article’s publication, billions of pounds were wiped from listed insurance companies, with the market panic only subsiding when the FCA eventually published a clarification in response to fierce lobbying more than six hours after markets opened.
The FCA eventually issued a statement in which it said it ‘acknowledged’ the concerns of the market and that it would be conducting an investigation involving an unnamed external law firm.
Since then, Martin Wheatley, FCA chief executive, admitted he will face serious questions over the blunder, the FCA was publicly rebuked by chancellor George Osborne and institutional investors have taken legal advice to pursue the regulator for market abuse.
The Association of British Insurers also recently confirmed it knew of the review and that FCA supervision director Clive Adamson was giving a briefing to the paper, but that the regulator “declined” to give detail upon verbal request.
The inquiry will address the business plan, the press briefing and the handling of price-sensitive information. In particular:
• was there an appreciation that the business plan could contain information that was price-sensitive;
• what was the process for selecting the items on which press briefings would be made;
• what was communicated to the journalist, amongst other questions;
• what procedures exist to identify and control the release of price-sensitive information; and
• what process was or should have been followed to confirm whether or not the information was likely to be price-sensitive.
The FCA board says, subject to legal considerations, it will publish the report of the independent inquiry in full.
