The inquiry into how the FCA handled its closed book review announcement has revealed former FCA head of supervision Clive Adamson did not give the ill-fated media briefing that sent insurer share prices tumbling earlier this year.
Clifford Chance partner Simon Davis has been carrying out an independent inquiry into how the regulator announced its closed book review in March. The findings have been published today.
The reports says the briefing to the Daily Telegraph ahead of announcing the closed book review as part of its business plan was well intentioned, but the approach was “high risk, poorly supervised and inadequately controlled”.
On the day the report was published, the FCA took six hours after the markets opened to issue a clarification statement.
Davis says the FCA’s reaction was “seriously inadequate and fell short of the standards expected of those it regulates”.
The briefing was not given to Adamson, as has been suggested, but by FCA director of long-term savings and investments Nick Poyntz-Wright. The report says Adamson did not know about the briefing.
In his report, Davis says both Poyntz-Wright and Adamson failed to appreciate how price sensitive the information about the closed book review was, particularly in the wake of the Budget.
Adamson resigned from his role at the regulator earlier this week, ahead of the report being published.
He is on six months notice, and will be put on gardening leave from the end of January.
The FCA has agreed to all of the Davis recommendations, including releasing its business plan to all market participants at the same time. There will also be new sign-off procedures for all external and internal communications.
FCA chairman John Griffith-Jones says: “Simon Davis has produced a comprehensive and rigorous report in which he makes a number of criticisms of the way the FCA handled the launch of the 2014/15 business plan. The board fully accepts Mr Davis’ criticisms and on behalf of the FCA we apologise for the mistakes that were made and the shortcomings in systems and controls which his report has revealed.
“Mr Davis also makes a number of recommendations about changes to our systems, processes and ways of working. We accept all of his recommendations and I can confirm we are now implementing them.
“The FCA non-executive directors would like to thank Simon Davis for his thorough investigation. As a regulator we hold ourselves to the highest standards and in this case we fell short. I am determined the FCA will learn the lessons and we will do our utmost to ensure that a situation like this will never happen again.”