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FCA chairman: £60k closed book PR cost was ‘insurance policy’

FCA chairman John Griffith-Jones says the £60,000 cost of external PR advice for the inquiry into the regulator’s bungled announcement of its review of closed book business was a “responsible insurance policy”.

Under questioning from the Treasury select committee today, Griffith-Jones was asked to justify the £3.8m cost of the review, which includes £60,000 to FTI Consulting for ‘strategic communications advice’.

Griffith-Jones said: “I felt that we needed some communications advice as a board and I knew that our own communications people would be impossibly conflicted in providing that.

“It was a responsible insurance policy against us needing advice.”

TSC chair Andrew Tyrie accused Griffith-Jones of making a “colossal misjudgement” in stating publicly that the board would have oversight of the review, arguing this created the impression the FCA would be “marking its own homework”.

But Griffith-Jones argued the intention was merely that the board would have oversight of the logistics of the review being published.

FCA chief executive Martin Wheatley also came under fire from MPs on the regulator’s communications strategy.

Conservative MP Mark Garnier told Wheatley that using the media as a regulatory tool is a “bizarre and crude” method which carries a high risk of messages being lost in “Chinese whispers”.

Wheatley said: “Not withstanding that we screwed up on the occasion in question, the industry values our communications.

“We want people to have access to forms of communication that they read. People do not always read our website and firms do not always open our emails so we use a variety of different media.”

MPs pressed Wheatley on why the FCA has not decided to stop all pre-briefings to the media following the incident which sent insurers’ share prices tumbling in March.

But Wheatley argued that publishing information under embargo leads to more accurate reporting.

He said: “Without an embargo you can get some quite wild stories which are fired off in 10 minutes because journalists are under time pressure.”

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Comments

There are 19 comments at the moment, we would love to hear your opinion too.

  1. What’s so painful about such inquiries is that the TSC is so powerless. Just examine the answers given, particularly by Griffith-Jones. The sub-text of is quite plainly “Yes we did (do whatever it is) and no, we’re not going to apologise and what are you going to do about it?”

  2. E L Wisty (an only twin) 27th January 2015 at 2:13 pm

    @ Neil Shillito

    Absolutely.

    I suspect that Griffin-Jones and Wheatley are probably seething in anger regarding the TSC’s effrontery to inconvenience them in this manner. After all, if it wasn’t for the TSC, the £3.8 million could have been spent on bonus, more paintings or particularly nice chocolate biscuits.

  3. Well Mr Tyrie, what did you expect ?

    Here we have Griffiths Jones a man with a history of major failures with KPMG (HBOS and Co-op) now with the FCA

    And as Neil has pointed out above, he couldn’t give a toss what you or the TSC say, and in true Sants style, with brass knobs on !!

  4. It must be getting close now, when the TSC really goes off on one.

    Would it not be perfectly sublime if the pendulum were to swing and the FCA had to account and be accountable. For ever action there is and equal and opposite reaction.

    I fear though its a bit like the DFS sale, it will never end. I might live long enough to see it,

  5. Neil Shillito ~ bang on. Which is why I keep banging on about the need for an independent Parliamentary body with real powers (of which the TSC has none) to hold the regulator to account.

    No mention here, I note, of the fact that the FSA spent yet more of OPM to pay for the people at the centre of this particular foul-up to receive legal counsel.

    Coming under fire from MP’s when they have nothing to back up their questions and challenges is like merely shooting blanks.

  6. Until Parliament makes the FCA legally accountable to an independent body this type of prevarication, evasiveness and one-finger saluting will carry on.

    Is it beyond the capability of one or more members of the TSC to raise a private members bill to make the necessary changes?

  7. Where is Watt Tyler when you need him?

  8. Alan,

    I think that you will find that it was actually two!

  9. Wat Tyler was a leader of the 1381 Peasants’ Revolt in England. He marched a group of protesters from Canterbury to the capital to oppose the institution of a poll tax. While the brief rebellion enjoyed early success, Tyler was killed by officers loyal to King Richard II during negotiations at Smithfield, London

  10. E L Wisty (an only twin) 27th January 2015 at 4:10 pm

    @ Phil Castle.

    Indeed.

    Alternatively, to paraphrase Dick the Butcher (Henry The Sixth, Part 2 Act 4, scene 2), “The first thing we do, let’s kill all the regulators”.

  11. Maybe Oliver Cromwell might have more success !!

    On a serious note – it really is sickening that these people just keep getting away with it. What`s the saying, power corrupts & absolute power corrupts absolutely ?

  12. E L Wisty (an only twin) 27th January 2015 at 4:25 pm

    @ Steve

    Yes, it is sickening and we can only hope that Andrew Tyrie may be a catalyst for eventual change.

    Their behaviour and sense of self-importance is absurd and, as Voltaire said, “those who believe absurdities, commit atrocities”.

  13. I don’t think it is only about the money. It is the use of a PR firm that grates. After all what is PR? A service akin to putting lipstick on a pig. If you are honest and straightforward you don’t need these proponents of spin and whitewash.

    If politicians, advisers and double glazing salesmen are held in low esteem I cannot begin to assimilate the depths of derision and distaste to which a PR practitioner is subject.

  14. Alan Lakey ~ To answer your last question, apparently it is. You really would think that by now Andrew Tyrie would be getting sufficiently hacked off with the way in which he and his Committee are treated by the FSA/FCA to try to get something done about it. Perhaps he has but, in line with its stance that the FCA’s immunity from prosecution is sacrosanct, perhaps the Treasury is also of the view that the FCA should have immunity from EVERYTHING. It certainly seems as if it does, does it not?

  15. Wat Tyler needed.No one should be above the law.

  16. The reality is that should the FCA become accountable to anything like a Treasury Select Committee, they will simply again blame parliament for a lack of clarity in instruction, then Andrew Tyrie the accuser will become an accused. This is just typical spin which previous PR gurus within the FCA have used and do we really need to spend £100k+ to prove this? Well, we already have. How can Mr Tyrie and Co be seen to be independent champions of the government, and in turn the public, should they be seen to be in any way responsible? They can’t, so Mr Tyrie will continue with his soundbites and nothing will change. If it was going to, it would have been when Hector Sants effectively laughed at him that parliament was responsible for regulatory failures as they formulated the environment the FSA was to work under. As a game of fault the rules are easy for the FCA to manipulate, and it is always ultimately someone else’s fault. Without personal accountability from politicians, regulators and company executives the whole thing is a waste of time and money as it only perpetuates a sham. The industry always compensates and the games begin again. I am just insulted that these people think we can be miked indefinitely and have no idea what their clever little schemes are actually about. Thing is, with all the inquiries since 2008 what has really changed other than a face or a name here and there? Accepting that, why should anyone milking the system change their behaviors, would you when so heavily rewarded, not just in inflated salaries and bonuses but also knighthoods to boot? The government creates a large part of the problem by rewarding failure and corruption and these select committees without bite are also part of the problem. They are either epic failures or are obviously not about finding solutions but rather PR stunts to suggest they might eventually if we all keep paying and playing their games. Failure or fraud, I have been sickened either way.

  17. @ Steve Balmer – How’s Microsoft?

    @ Phil

    In the end Mr Tyler achieved diddly squat. He publicly decapitated, his head was placed on a pole and carried through the city to be displayed on London Bridge. He became a martyr. Big deal.

    By contrast Richard ii was instrumental in ending the 100 years war and his court was unusual at the time for being civilised and cultured. Yes he was ultimately usurped by Bolingbroke.

  18. To quote from a sketch featuring John Bird and John Fortune on one of Rory Bremner’s TV shows: Success should be rewarded, failure should be compensated. Never truer than within the FCA.

    The FCA, incidentally, has been asked to reveal what compensation (in addition to 6 months fully paid gardening leave) Clive Adamson is to be paid for loss of office. It has declined to offer an answer but has indicated that one will be forthcoming later in the year so, from this, we know there will be an additional payment and, from experience, we can be fairly sure it will be substantial (not to mention completely unjustifiable). After all, the bloke just resigned, didn’t he? Nothing, so the FCA would have us believe (I don’t believe it for one minute), to do with his part in the FCA’s disastrous handling of its proposed closed book review, despite the fact that he has, as yet, no new job to go to. So how does that warrant 6 months fully paid gardening leave with a fat lump sum severance settlement on top?

  19. It matters very little if you are a, Cromwell, Tyler or Richard the 2nd !

    The fact of the matter is, the FCA and more importantly government and MP’s know we wont unite to “march” (if you will)

    I don’t believe there is one among us, who would bang on the door of Canary Wharf and demand justice and not leave until they did !

    David Cameron recently was up in arms about the fee they (the UK) had to pay to Brussels, saying, its not fair for the good to pay for the bad ! then spun a yarn that GO had saved the day !!
    This happens to us all the time, we bleat, stamp our feet and ignored !!

    The only way to stop this or get justice is (I’m afraid) non payment by all and I mean, not just IFA’s but the industry as a whole !

    Then and only then would the whole system come crashing down forcing the FCA and government to react

    But again this wont happen because we wont unite (or by a very large majority) so we keep getting treated like cash cows by the FCA and its off shoots and the treasury,

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