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.”