An “extraordinary blunder” that saw a senior figure at the Financial Conduct Authority leak details of a major upcoming investigation into life companies and created a “disorderly market” in insurers’ shares has led to calls for the chief executive of the conduct watchdog to stand down.
After another dreadful day for the listed life company sector that saw billions of pounds wiped from company values for the second time in two weeks, the regulator issued a clarification on the scope of its review in the afternoon in response to fierce lobbying.
It later 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.
However, the industry may demand further action. The Sunday Times reported yesterday that the Association of British Insurers is set to write to chancellor George Osborne to complain about the conduct of the FCA, while sources at “four of Britain’s biggest insurers” are said to have branded chief executive Martin Wheatley’s position “untenable”.
Andrew Tyrie, chairman of the Treasury Select Committee, was also said by the paper to have described the actions of the FCA as an “extraordinary blunder”.
The furore followed a report in The Telegraph on Friday based on an interview with Clive Adamson, director of supervision at the FCA, in which he told the paper the regulator is investigating the level of profits made by insurers from funds closed to new business.
The paper stated Mr Adamson had said the regulator would be investigating policies sold via direct sales forces since the 1970s in a probe that could cover some 30m sales of pensions, endowments, investment bonds and life insurance.
Mr Adamson said the review would be outlined in the regulator’s business plan, published this morning.
The sell-off following the revelations saw Phoenix Group and Resolution, owner of Friends Life, nursing losses of 20 per cent and 15 per cent respectively by early afternoon, while elsewhere, Aviva and Legal and General were down 8 per cent and Standard Life and Prudential were down 4 per cent.
Public statements that cause a share price to move by more than 5 per cent are expected to be corrected quickly, according to rules set out by the UK Listing Authority, itself a division of the FCA.
Amid fierce lobbying behind the scenes, L&G took the extraordinary step of publishing a statement on the stock exchange at lunchtime demanding the watchdog bring forward publication of its business plan “in view of today’s disorderly market”.
It said: “We expect further, official clarification from the FCA when it publishes its business plan, and in view of today’s disorderly market we are requesting that the FCA bring forward the publication of the plan.”
An FCA statement published at around 2.30pm clarified that it “will be reviewing a representative sample of firms” and is “not planning to individually review 30m” policies - and also that it is not intending “to look at removing exit fees from those policies providing they were compliant at the time”.