LONDON (Reuters) - The Financial Conduct Authority’s (FCA) handling of information that sparked a slump in insurance company shares was not its “finest hour,” its chief executive said following criticism from an influential lawmaker.
FCA boss Martin Wheatley said on Monday he takes responsibility for what happens at the regulator after Andrew Tyrie, the chairman of parliament’s Treasury Committee, described the watchdog’s actions as an “extraordinary blunder”.
The debacle over the FCA’s release of price-sensitive information on Friday about its planned insurance sector review is embarrassing for the regulator, which is trying to establish its credibility as it marks its first anniversary on Tuesday.
The FCA on Friday appointed an external lawyer to examine how the watchdog released news earlier that day of its review into whether insurers treated people locked into 30 million pension and other savings plans fairly compared with new customers.
Shares in top insurers fell sharply after a newspaper interview with a senior FCA supervisor prompted speculation the probe could lead to changes that would affect the profitability of their products.
The regulator clarified its position in a statement early on Friday afternoon, almost six and a half hours after shares started trading.
“Whenever markets move like they did on Friday there is always scrutiny,” Wheatley, told City Week 2014, an annual financial services conference in London on Monday.
“This was clearly not the FCA’s finest hour, but it does serve as a timely reminder to all parties involved of the care and thought that is needed when handling significant amounts of information we hold as part of going about our business,” Wheatley said.
He later told reporters that the external review into the FCA’s conduct will be concluded as quickly as possible.
Shares in listed life insurance companies rebounded on Monday after the FCA published its business plans for the year, confirming the probe would be less disruptive than investors first feared on Friday.
Resolution closed 0.8 percent higher, while Aviva was up 1.5 percent, both outpacing their benchmark FTSE 100 index which was 0.3 percent lower. Legal & General slipped 0.2 percent.
A senior board member of a FTSE 100 insurer said: “The FCA plan that came out today seems pretty benign and I wouldn’t have expected any reaction to this had it not been for what happened on Friday.”
A senior executive at a large insurer said the manner in which the FCA had disclosed the review on Friday was “extraordinary”.
“The impression was given around things like exit fees that it was going to be a very draconian intervention. It was bad to have given that impression but if that happens you have to correct it quickly,” the CEO said.
Reporting by Huw Jones; Editing by Erica Billingham