Outgoing FCA director of supervision Clive Adamson believes the bungled closed book briefing was “almost certainly the most serious incident we’ve encountered at the FCA”.
Last week, the Davis inquiry revealed a catalogue of failures at the FCA that led to share prices at insurers’ tumbling following a story in the Daily Telegraph that said the regulator was planning to intervene on “rip-off” pension charges.
At a Treasury select committee hearing today, Labour MP Andy Love questioned Adamson on why chief executive Martin Wheatley was not alerted about the issue sooner.
Love said Adamson should have ignored protocol and immediately informed Wheatley given the gravity of the story’s impact on markets.
Adamson said: “This almost certainly was the most serious incident we’ve encountered in the FCA. I agree, one can only speculate about what might have happened if we had brought together people early, but it still took until 2.27pm to get the announcement out and I think we all regret that.”
Adamson, who resigned prior to the publication of the Davis review, admitted the incident exposed weaknesses in the regulator’s system.
He said: “I would have to agree this event looks like a multiple breakdown of controls.
“It’s quite difficult to explain why there was a widespread breakdown of controls. My only explanation is this has never happened before and particularly a crisis that was self-caused, we’ve had no experience of.”
He added the FCA had not previously had any problems with handling information that could potentially move markets, but admitted there “was a misplaced assumption that the business plan couldn’t have been price sensitive, and that was a mistake”.
FCA director of communications and international Zitah McMillan, who is also due to step down from her role at the regulator, said she would left irrespective of the damning report.
She said she saw the job as a “three-year post” when she took it and “would have gone anyway” because of a disagreement over the regulator’s plans to demote her department.
She said: “Removing communications from the executive committee I fundamentally think is the wrong thing to do.”
McMillan said it was not the FCA’s strategy to use pre-briefings for market sensitive information and that the business plan had not been classified as market sensitive by the team who wrote it.
She admitted there had been a “fundamental breakdown in the control you’d expect to see in a division like mine”.