Martin Wheatley has admitted that the watchdog “screwed up” on its handling of a press pre-briefing that led to life insurers’ shares plummeting two weeks after the shock Budget announcement caused billions of pounds to be wiped off their shares.
The chief executive of the Financial Conduct Authority was brought before the Treasury Select Committee this morning to answer questions on the incident that chairman Andrew Tyrie described as “not a good day in the office”.
He was also quizzed on the culture of the regulator in the context of the incident, with Mr Wheatley saying under questioning that he regretted his infamous comment that the FCA would “shoot first and ask questions later”.
He added that his words were taken “out of context” and that it was an attempt to signal that the new body would be “more of a judgement-led regulator, less box-ticking... more on the front foot”.
At the end of March the Daily Telegraph published an article following an interview with the FCA which revealed the regulator could force pension providers to allow savers that have taken out some 30m policies over the past four decades to exit for free over exit fee concerns.
As a consequence, listed providers’ share plummeted, however the regulator did not issue a response to the market until some eight hours later.
Today (27 January), Mark Garnier, a Conservative MP for Wyre Forest, accused the FCA of a “cack-handed approach” in using the media to get messages across, stating that different newspapers will inevitably highlight different things and not pick-up certain nuances.
Mr Wheatley responded: “Risks have to be managed, the alternative you’re suggesting is that we don’t communicate outside of a few very narrow channels. The industry welcomes our open approach, notwithstanding the fact we screwed up on this particular day.”
On pre-briefings, Mr Wheatley explained they are only done when information is not market sensitive. He conceded that on this occasion they had not expected one specific piece of information would be handled in the way it was.
“There was an absolute focus from insurance team to make sure the announcement would not move markets and did not contain price sensitive information - we hadn’t expected that the fact that the journalist would look at an area that would become such a big story.”
Mr Wheatley stated that the overall strategy was appropriate, but that there were poor controls on the day.
“We didn’t catch up fast enough to correct the story the journalist sought to write, but we can’t retreat into our shell because of the critcism we received on this occasion,” he stated.
He added that the FCA has changed a number of processes, one of which is that notifications on significant market moves go to the executive committee and are put through to him if there is no obvious explanation.