The FCA has set aside an additional £500,000 to cover the cost of legal advice for senior staff in its closed book review inquiry, sending the total cost of the botched briefing soaring to more than £2m.
The inquiry into the FCA’s bung-led announcement of its review of closed book legacy business, which caused insurers’ share prices to tumble in March, is being carried out by Clifford Chance.
The regulator has also hired law firm Kingsley Napley, which has represented high-profile rogue traders including UBS’s Kweku Adoboli, to advise chief executive Martin Wheatley and other senior staff inv-olved in the probe.
The FCA initially set aside £250,000 for Kingsley Napley and a total of £1.7m for the inquiry. But a Freedom of Information request submitted by Money Marketing reveals Kingsley Napley’s costs have tripled to £750,000, taking the total cost of the inquiry to £2.2m – 30 per cent higher than the initial estimate.
The FoI request shows the costs include £60,000 paid to FTI Consulting for PR advice to the FCA board. So far, the regulator has been invoiced by FTI Consulting for £25,000.
On 28 March, the Daily Telegraph reported that 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.
Money Marketing understands the regulator decided to set aside £1.7m for the inquiry in the days after the story was published and before the terms of reference of the review were known.
It is understood that some members of the FCA’s internal media relations team are unable to advise the board because they are involved in the inquiry.
Jacksons Wealth Management managing director Pete Matthew says: “This is an insane amount of money to spend on cleaning up the mess for something that should never have happened. For £60,000 of our levies to be spent on a PR firm to handle what was a PR screw-up really sticks in the craw.”
The FCA declined to comment.