The FCA ignored warnings from the Bank of England about the impact on the market following its closed book probe briefing that sent insurers’ share prices plummeting.
Ahead of its business plan last week, the FCA briefed the Daily Telegraph about a review it was to carry out into closed book policies and the fair treatment of customers.
The report suggested 30 million policies would be reviewed, with the regulator considering scrapping punitive exit charges.
The news caused the share price of companies such as Resolution, Phoenix and Legal & General to drop significantly. The shares only started to recover lost ground when the FCA clarified at 2.30pm the extent of its planned review. It later said it would carry out an inquiry into its handling of the announcement, with the help of an external law firm.
The Sunday Times reports that Bank deputy governor and Prudential Regulation Authority chief executive Andrew Bailey called FCA chief executive Martin Wheatley shortly after 9am on the day of the Telegraph report, to press him to issue a statement about the review.
The newspaper says Bailey’s office called all morning, repeating requests for the FCA to make its true position clear.
The Financial Times quotes a source who says Bailey “went ballistic” at the FCA’s delay in clarifying the extent of the probe.
The Treasury is also thought to have applied pressure on the FCA . Senior Treasury official John Kingman, who was carrying out at interviews at the FCA’s offices, is said to have approached FCA chairman John Griffith-Jones and pressed him to order an independent legal review of what happened.
Chancellor George Osborne has written to Griffith-Jones expressing his “profound concern” about the FCA’s actions.