Treasury select committee chairman Andrew Tyrie has warned the FCA’s board not to interfere with the inquiry into its bungled announcement over closed book legacy business.
In March, the Daily Telegraph reported the FCA was set to force insurers to review exit charges on all their legacy policies as part of a closed book investigation. Insurers’ share prices plummeted in the six hours it took the FCA to release a clarification statement on the scope of the review. The FCA issued a further statement later the same day to say it would carry out an investigation into its handling of the matter.
Last month, the FCA appointed Clifford Chance senior commercial litigation partner Simon Davis to carry out an independent inquiry into its handling of the announcement of its probe into closed book policies. Today it has also published protocol for the way the review will be carried out.
Tyrie says: “It is crucial – now that the FCA’s non-executive directors have commissioned this inquiry – that neither they nor the board play any further role until Mr Davis has completed his final report.”
“The credibility and integrity of the regulator is at stake. So are the needs of consumers of financial services – who must be able to rely on the competence of their regulator. So it is essential that this investigation is, and is seen to be, both comprehensive and completely independent.”
He added that the inquiry will “probably need to range far more widely” than the run up to the briefing of the Daily Telegraph.
He said: “Mr Davis may need to look, among other things, at the extent to which the apparent blunder was associated with the FCA’s wider media strategy; the new approach that it seems to be taking with the regulated community; its wider effects on the UK financial services industry and hence consumers; and the extent of board members’ involvement in the strategy, as well as the FCA’s procedures – as the listing authority – for dealing with price-sensitive information.”
The committee has also confirmed that it will take evidence from Davis when his report is completed.