Martin Wheatley, chief executive of the Financial Conduct Authority (FCA), told the cross-party Treasury committee in relation to the fiasco last March: “We had not expected that the fact we would look at an area… would itself become such a big story.”
The action sparked a storm of protest from British insurers about a false market being created in their shares, with Chancellor George Osborne publicly recording his dismay to the FCA.
It followed the City watchdog’s director of supervision, Clive Adamson, being quoted in a national newspaper on plans to review 30 million insurance policies going back decades and the potential scrapping of exit fees on such policies.
Wheatley, in an often hostile session with MPs yesterday, said: “We clearly got this wrong.”
The FCA boss also admitted he regretted his comment soon after taking office that, where financial wrongdoing was concerned, the successor to the Financial Services Authority would “shoot first and ask questions later”.
SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING
That was “too aggressive” and not the culture of a regulator charged with maintaining confidence in financial markets and protecting investors, he said.
Wheatley was stripped of his bonus of up to £115,000 after an independent £3.8 million report from Simon Davis of law firm Clifford Chance said the FCA’s decision to effectively make the insurance “back book” announcement via a newspaper interview was “high risk, poorly supervised and inadequately controlled”.
Three other senior FCA directors also lost their bonuses, including Adamson, who resigned in December.
Tory MP Mark Garnier told Wheatley and FCA chairman, John Griffith-Jones: “I find this whole idea of using the media as a tool of regulation completely bizarre. A lot of people lost a lot of money through you not managing risks properly.”
Liberal Democrat MP John Thurso said: “The regulator who regulates the markets moves the markets, and it cannot get worse than that.”
Wheatley replied that “notwithstanding we screwed up on this day in question”, and that such individual pre-briefings would not recur, the strategy of using tightly controlled, embargoed pre-briefings on sensitive issues was still valid as it helped informed media coverage.