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FCA hires controversial law firm to advise Wheatley in closed book probe

The FCA has hired a law firm which has represented some of the most high-profile rogue traders to advise senior staff at the regulator in an inquiry into how it announced its closed book review.

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.

Clifford Chance senior commercial litigation partner Simon Davis has since been appointed to carry out the inquiry.

Sky News reports the FCA has appointed law firm Kingsley Napley to advise chief executive Martin Wheatley and other senior individuals in the review.

Kingsley Napley has previously acted for Nick Leeson after the collapse of Barings Bank, and UBS rogue trader Kweku Adoboli, who was sentenced to seven years in prison for unauthorised trading which led to $2.3bn (£1.4bn) losses.

Earlier this month, a freedom of information request submitted by the BBC revealed the FCA has so far been invoiced £116,845 by Clifford Chance for the inquiry.

The regulator has set aside £1.7m from its 2013/14 annual accounts to cover the costs of the review.

Last month, minutes of an FCA board meeting revealed the regulator will use an external press relations firm to provide advice to non-executive directors as part of the inquiry.

The FCA and Kingsley Napley declined to comment. 

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. E L Wisty (an only twin) 24th June 2014 at 11:51 am

    I trust that all costs will be met by our glorious regulator, from its bonus pot, and not passed onto us. Some chance!

    I bet that Kingsley Napley’s partners are busy ordering duck houses and Aston Martins, in wonderful anticipation of this bean feast.

  2. £1.7m to carry out a review that will inevitably end up saying that although the FCA made an error, no one made any serious breaches of the rules and they’ll implement a further review of internal processes to ensure it doesn’t happen again (at least not in the same format)!! Probably the perpetrator of the comments will be pensioned off and given a new job with a large institution, on a large salary!

    Who’ll pick up the overall cost? You’ve guessed it…………..US!

    If this scenario had been played out in reverse, you can guarantee that the full might of the FCA would have been launched at that person and legal proceedings would have been sanctioned against them. But as it’s an internal matter within the FCA, best make as little noise as possible, issue some ‘independent’ review and take out the largest brush and sweep it under the plushest carpet they can find in FCA Towers.

    And who gains out of this whole process……..yep the legal profession.

    I’m off to re-open my law books……..

  3. Exasperated Me 24th June 2014 at 1:41 pm

    Will they be looking into the fact that the former FSA CEO jumped ship just days before the FCA announced the review?

  4. Julian Stevens 24th June 2014 at 1:52 pm

    So, £1.7m of OPM to kick off with, just to investigate Clive Adamson’s gaffe, and now another law firm who’ll probably charge at least as much to conduct a review that one would reasonably expect the FCA to be sufficiently competent to carry out for itself. Just how complicated are the issues involved? It’s hardly rocket science.

    1. The charges on many of these old contracts are decidedly heavy by current standards. Simple question: Can the FCA force the providers to reduce or rebate these charges all these years down the line?

    2. The ranges of funds available tend to be limited, poorly performing and very dificult to get meaningful data on. Simple question: Can the FCA force the providers to extend their fund ranges, employ better quality managers, implement better investment processes and provide clearer performance data?

    3. The early exit charges are often unreasonably punitive. Simple question: Can the FCA force the providers to reduce these charges, not least on the grounds that they (the providers) may well be taking unreasonable advantage of woolly contractual clauses?

    Is thre really much more to it than that? How many millions of pounds will Kingsley Napley charge? Given the FCA’s reputation for a pretty open cheque book (were competitive tenders invited?), they must be rubbing their hands with glee at having landed this one. Contracts with the FCA must be amongst the most sought-after in town. If your face fits and you have the right connections, money’s no object.

  5. brian weatherley 24th June 2014 at 2:48 pm

    How about the sentiment Mr Wheatley extolled in acting within the “spirit of things”. Seemingly, a mistake was made by the his staff and contravened the law both in fact and in spirit. So why not admit the mistake and then “play up and play the game” ( or should that be “pay up”). To make those funding the regulator meet a not inconsequential sum for the defence of a mis-demeanor perpetrated by the Regulatory Body itself is by my code both fundamentally and morally wrong.

  6. Simple questions but only a simpleton would think that there are simple answers.

  7. I my belief is correct and the FCA are allowed to set their own budgets, salaries, bonuses and more importantly how they vet, contract and pay for outside suppliers; then how we can expect them to worry about cost and saving !!!

    They are totally funded by the financial services industry, but more importantly their clients !!! the money they receive is ? well basically free they don’t work for it as such, they don’t come under any real pressure to justify their spending, salaries, bonuses or costs

    The only way to kerb this is; we as an industry need to make the public really know how much this “QUANGO” is costing them !!! get this “dirty washing” (if you will) out in the fresh air !!!

    Crikey if the consumers, are up in arms at how much bonuses and pay other people get what would they say about the wanton waste the FCA are !!!

    On a final note; this makes a bit of a mockery of Mr Wheatly’s award by Witch ? oh sorry Which !!!

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