It will take “many years” for the FCA to be taken seriously as a regulatory body, the outgoing chairman of the Treasury select committee has warned.
Andrew Tyrie said: “From the beginning the FCA has had to grapple not only with its own challenging role, but with the deficiencies of its predecessor, the FSA.
“It has been working hard to address these weaknesses, and to break the link with the failed FSA.
“On the evidence so far, these efforts to create a more effective conduct regulator are likely to take many years.”
His comments came as the TSC released a report into the pre-briefing incident with the Daily Telegraph last year, which caused billions of pounds to be wiped from the value of listed insurance companies.
The TSC report criticised both the FCA itself and its chief executive Martin Wheatley.
Its report said: “One of the FCAs’ secondary objectives is ‘protecting and enhancing the integrity of the UK financial system’, which includes ‘the orderly operation of the financial markets’.
“In selectively releasing information to the press about its work, the FCA put these statutory objectives at risk.
“By effectively breaching its own listing rules, the FCA itself created a false market in life insurance shares. This is a matter of serious concern.”
It went on to say that the FCA’s communications strategy of using the media to reach as many people as possible – including regulated firms – made this incident “not just possible, but likely”.
Published in November, the Davis Report looked into the issue of the press briefing of market-sensitive information.
It was the result of an investigation launched after a story about a planned study into pensions appeared in the Daily Telegraph on 27 March, leading to £3bn being wiped off the market value of a number of insurance companies the next day.
The report revealed that quotes in the article were attributed to former FCA director of supervision Clive Adamson without his knowledge – though he sent an email the next day saying the article “looked good” despite not having read it.
The committee said it was “concerned” Mr Wheatley had not accepted that the FCA’s communications strategy was to blame for these events.
Adviser view
Dennis Hall, chief executive of London-based Yellowtail Financial Planning, said: “We get fairly regular emails from the FCA and that seems to work - they have certainly got better. There are so many things that the FCA has to communicate to people and they have got to have the common sense internally to know what they can send to the press and what can influence the market.”
Simon Webster, managing director of Kent-based Facts and Figures, said: “Personally, I think if the FCA has an important message there is something called email which is easy to use.
“Any politician will tell you that trying to manipulate the media to deliver the message you want delivered is wasting your time.”
