Leak costs FCA boss his bonus

THE boss of the City watchdog has been stripped of his bonus after a bungled leak of an impending investigation wiped billions off the value of insurance companies

In a chastening day for the Financial Conduct Authority, it said chief executive Martin Wheatley was among four senior executives who would lose their entire bonus. A further five will have 25pc of their annual windfall docked.

The action follows the publication of a damning report yesterday by Simon Davis, a partner at law firm Clifford Chance.

This accused the FCA of creating a ‘false’ and ‘disorderly’ market by leaking market sensitive information about a review of millions of old pensions, investments and insurance policies.

Yesterday MP Andrew Tyrie. chairman of the House of Commons Treasury Select Committee, was forthright in his criticism.

He said: ‘The catalogue of errors made across the organisation is shocking – and some of the errors went to the top.’

The incident occurred in March, when the FCA’s director of longterm savings Nick Poyntz-Wright briefed the Daily Telegraph newspaper about the investigation.

The article, published at 10pm on March 27, indicated the watchdog could scrap exit charges imposed by insurance companies to lock customers into these policies, which often offer poor returns.

The next day, fears that insurance companies could lose customers and be hit with huge compensation claims caused their share prices to plunge, knocking around £3bn off their value in several hours.

Shares only rallied after the FCA commented at 2.27pm.

That was when it clarified that its probe was less drastic than insurance companies had feared.

Chancellor George Osborne wrote to the regulator, saying the leak was damaging both to the FCA and to the UK’s reputation for regulatory stability and competence.

The Davis Report criticised the FCA for not realising the information could hit shares, and said it was too slow to issue clarification. The report particularly criticised director of supervision Clive Adamson, who has resigned and been stripped of his bonus.

It added that he was not aware that Poyntz-Wright had given an interview to the Daily Telegraph in his name.

The report said that after being sent a copy of the article, Adamson had responded by email at 7.42am on March 28, saying: ‘Thanks, looks good’.

The £3.8m report added: ‘ He (Adamson) did not, however, read the article, despite the concerns that he knew his team had about the briefing taking place.’

Adamson then received a ‘furious’ call from an insurance company at 8.53am about the chaos in the stock market. The report says that he failed to take a grip on the situation and ensure a clarifying statement was issued.

Director of markets David Lawton, who has lost his bonus, also decided there was no need to issue a statement.

Wheatley stands to lose up to £115,000 while Adamson misses out on £86,000. Communications chief Zitah McMillan, who has resigned, has also lost her bonus.

FCA chairman John Griffith-Jones apologised and said its reputation had suffered a ‘knock’ as as result of the gaffe.

He said that the board had total confidence i n chief executive Wheatley who did not come in for any major criticism in the report.

The FCA had nine complaints from people who claimed to have lost money as a result of the gaffe but Griffith- Jones said it had had legal advice that it was not liable to pay compensation.