Insurers pile pressure on ‘clumsy’ FCA

ThE insurance industry has ratcheted up the pressure on the City watchdog for leaking details of a probe into old pensions and investments that sparked a shares rout.

Otto Thoresen, boss of the Association of British Insurers, told the Treasury Select Committee that the Financial Conduct Authority’s ‘clumsiness’ had undermined trust between the Government, regulators and insurers.

Before the hearing the Committee published a letter written by ABI chairman and Prudential chief executive Tidjane Thiam on April 1 to Chancellor George Osborne. This highlighted Thiam’s ‘serious concerns’ about the ‘premature and selective disclosure’ of the FCA’s planned probe.

Osborne told the FCA he was ‘ profoundly concerned’ by i ts actions.

The regulator yesterday confirmed it had appointed Clifford Chance’s senior litigation partner Simon Davies to lead an independent probe into the debacle.

The row stems from a briefing by the FCA last month when it apparently told a newspaper that it would be investigating whether up to 30m policies taken out between 1970 and 2000 were mis- sold. It was also reported to have said that the investigation might culminate in punitive exit penalties being scrapped. The article spooked investors and wiped around £7bn from insurance companies’ share prices the following morning. Shares only rebounded after the FCA finally issued a clarification at 2.32pm explaining it would not scrap exit penalties and would not be mounting a mis- selling investigation.

The Clifford Chance investigation will look into why the FCA gave the briefing, who authorised it, and why it took so long to issue a clarification to the markets.

Consumer campaigner Ros Altmann suggested the ABI had managed to exert its influence over the watchdog. This was rejected by insiders yesterday.