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FCA reveals Clive Adamson did not give closed book briefing

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.”

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. Phew!

    That’s ok then! Clive didn’t give that ill fated briefing, that’s a relief.

    Whoever gave the briefing is really irrelevant – that fact is that it was given by the FCA.

    If an ordinary High Street authorised person made a blunder of a comparative scale with such a catastrophic effect they would (a) be fired or at least suspended, and (b) be subject to a swingeing fine.

    So what isn’t that happening here?

    Martin Wheatley renouncing a £115,000 bonus isn’t the damn point!

    If the regulator is to have credibility and respect then it needs to apply and be seen to apply higher standards of competency, moral responsibility and integrity than those it regulates. In short it has to demonstrate its fitness and propriety to be a regulator.

    It has clearly learned nothing from the debacles such as Margaret Cole’s intemperate outburst over life settlements.

    This is the sort of behaviour we have come to expect of Banks – they rob steal and defraud us all, no-one is charged and the bonuses simply stutter for a while.

    Great to be in power.

  2. Michael.White.BoutiqueCapital - Bridging Loans 10th December 2014 at 12:32 pm

    Mr “Shoot first and ask questions Later” Wheatley, also known affectionately as ‘Two-Gun’ now required to dodge bullets, but not the one which has hit his 25% bonus…..

    One can only imagine the screaming, shouting and of course ‘finger pointing’ currently taking place within the walls of the FCA……so very amusing.

  3. So will the FCA fine themselves or do they get to sit outside of their own rules when found professionally negligent while the rest of the industry gets a fine and/or a claim upheld for professional negligence when performing a similar gaff! No I suspect they will be allowed to just say sorry!

    Firms have to apologise and review and improve their systems and controls just the same as the FCA will now look to do – but with a big fat fine and warning against them to boot!!!!!…….It’s just not right and the Government need to do something about an entity that is clearly not fit for purpose anymore.

  4. You are being far too lenient in selectively citing the report like this.

    Try Para.4.73 for starters: “Mr Adamson read first thing in the morning the email from the Media Manager of the previous evening which set out the full text of The Telegraph online article. Mr Adamson responded by email at 7.42 am saying, “Thanks – looks good”. He did not, however, read the article, despite the concerns that he knew his team had about the briefing taking place. He also did not react to the reference to his quotations being given good prominence, although he had not given any quotations. “

  5. So what`s happended to Nick Poyntz-Wright then ?? Why hasn`t he fallen on his sword ? Has he no shame.

  6. What everyone forgets here, intheir anxiety to bash the regulator, is that the share prices moved not just because of the briefing, but because the market thought that the life hoyses involved had probably been up to no good for years. Selling poor quality products and paying IFAs large commiassions to help them.
    The briefing caused them to think ;”OMG they regulator will go mad when they see how we’ve ripped Joe Public off”.
    What should happen now is they should go back and look at the pensions industry and “fund Managers” aka highly overpaid index trackers, and what a pack of utter rogues they have been, with expensive and opaque charging structures.

    Oh and I think RDR was just Peachy!

  7. Calls for the FCA to be ‘fined’ are pointless. Say they were to be. This would leave them with a funding shortfall and my guess is that the result would be an increase in next years levies to plug the gap. Advisers calling for this are effectively asking to fine themselves.
    The money should come from those responsible. Hence Martin Wheatley’s bonus hit is one appropriate measure. I am a frequent critic of Mr Wheatley but, credit where due, in this situation, he has taken the only responsible option available to him

  8. Whow, hang on a second. Those calling for the FCA to be fined is like turkey’s voting for Christmas. Who would end up being levied to make up the ‘shortfall’ in the FCA budget? US of course!

    As for the costs associated with the ‘Closed Book’ probe, I would have done it for half the price. Okay the language may not have been exactly the same, but the findings would have been broadly similar and I would have completed it well before the any of those responsible had a chance to put on their lifejackets and step in to the liferaft!!

    Now don’t get me started on bonuses………………………….

  9. Another perfect example of statutory Regulation – expensive, largely unnecessary and when you drill right down massively damaging to the industry – ‘The Emperors new Clothes’ created purely as a Government ‘patsie’ to use/say “wasn’t me guv”

    Many years ago a very comprehensive document ‘Leviathan at Large’ written by amongst other Andrew Tyrie (of TSC fame) warned of this and suggested burning it down – never has that been nearer the truth !

  10. Just goes to show how much the FCA are institutionally prejudiced against the people they regulate !! and also demonstrates the people are the same (X FSA mentality) irrespective of the name change above the door.
    One thing this does highlight is how little they think of the companies and people they regulate, and the people they are there to protect.

    And the over riding factor about this; more damage to a fragile industry in terms of consumer confidence, you can here the news now; “even the FCA is as incompetent, uneducated, poorly supervised, & inadequately controlled as the people they regulate” !!!

  11. Calls for the FCA to be ‘fined’ are pointless. Say they were to be. This would leave them with a funding shortfall and my guess is that the result would be an increase in next years levies to plug the gap. Advisers calling for this are effectively asking to fine themselves.
    The money should come from those responsible. Hence Martin Wheatley’s bonus hit is one appropriate measure. I am a frequent critic of Mr Wheatley but, credit where due, in this situation, he has taken the only responsible option available to him

  12. Agree with Man in Black. It’s one of those rare instances where the detail is worse than the headlines.

    The FCA take such a battering in the report, that it’s hard to pick out specific quotes because there are so many. A couple of things that struck me:

    1) Complete lack of systems, controls, vetting, monitoring and record-keeping as regards media communications

    2) A culture within the FCA media department where “scoops” and raising the FCA profile were more important than clear, responsible communications

    If the marketing department of a major insurer had equivalent systems/controls and a similar culture, there would likely be large fines heading their way. Should regulatory fees really be paying for a media associate to spend the day putting together a beauty parade of journalists to pre-brief about their Business Plan?

    This could be a watershed moment for the regulator. They clearly had become far too fixated with their image, when the simplest way of building their reputation is to perform their function properly.

  13. Almost as good as having one person responsible for regulation of RBS before the financial crisis.
    So this Mr Davis also makes a number of recommendations about changes to FCA systems, processes and ways of working. The FCA accept all recommendations and confirm they are now implementing them. It really does sound as though those involved entirely lost the plot. MIB’s comments and observations are excellent.
    This is the amusing part (or would be if they did not perpetrate so much injustice) – ‘As a regulator we hold ourselves to the highest standards’, and ‘the FCA will learn the lessons and we will do our utmost to ensure that a situation like this will never happen again.’ Which I think broadly translates as ‘get caught again’. Not a whiff of an apology. No, we don’t do that!
    How is it possible that this regulator is so unchecked and unaccountable that it considers their toolkit and modus operandi of lying, misrepresentation, and mis-briefing MP’s, Ministers and the police, as possibly holding themselves to ‘the highest standards’. This self-apologist is spouting complete drivel.
    The APPG set up by Guto Bebb MP to support Connaught investors will, we are told, critically review the behaviour of the FCA, what it knew and when it knew it, what it did, and unravel the lies it has been told by the FCA to date.
    It is simply ‘not on’ that the FCA dresses up misappropriation, theft and fraud by regulated entities Capita and Bluegate as a mis-sold investment. It is also not on that the FCA ‘asks’ the FOS to uphold all of the coerced investor complaints, whatever the investor circumstances, with the intent of claiming against the IFA’s. These guys were also misled and defrauded by Capita and Bluegate. The FCA behaviour is simply despicable and self-protectionist.
    Fraud, Capita and public procurement were the three statements stapled together in the recent Connaught Westminster Hall debate and this the occasion when Andrea Leadsom was so spectacularly mis-briefed.
    If the FCA is at all sincere about applying ‘the highest standards’ to the way it operates, this would be as good a place to start.
    I clearly still believe in Father Christmas, the Tooth Fairy and the Easter Bunny.
    The FCA response is one of guilt (and they know it). They were caught out. They do not want that to happen to them again so they will do anything to use their powers to protect themselves, even if this means putting IFA’s into bankruptcy over Connaught.
    ‘The Highest Standards’ – ‘in your dreams’. Pigs in troughs.
    Time for a change. Dismantle the FCA. It really is simply not fit for purpose.

  14. Woefully inadequate systems and controls. Isn’t that one of the FCA’s current hobby-horses over which they like to dish out sanctions and fines on firms deemed to have failed in this area?

    Ivor Harper points out that imposing fines on the FCA would be futile, which is correct because they’d simply recover them by loading next year’s levies. Fines could be effective, though, if they were accompanied by a prohibition order on the FCA from implementing such a measure. But, unless or until a truly independent regulator of the regulator is created, with real and unassailable powers of enforcement, this will never happen. Who guards the guards? Nobody. And that is one of the core problems of the regulatory structure under which we have to labour.

  15. Almost as good as having one person responsible for regulation of RBS before the financial crisis.
    So this Mr Davis also makes a number of recommendations about changes to FCA systems, processes and ways of working. The FCA accept all recommendations and confirm they are now implementing them. It really does sound as though those involved entirely lost the plot. MIB’s comments and observations are excellent.
    This is the amusing part (or would be if they did not perpetrate so much injustice) – ‘As a regulator we hold ourselves to the highest standards’, and ‘the FCA will learn the lessons and we will do our utmost to ensure that a situation like this will never happen again.’ Which I think broadly translates as ‘get caught again’. Not a whiff of an apology. No, we don’t do that!
    How is it possible that this regulator is so unchecked and unaccountable that it considers their toolkit and modus operandi of lying, misrepresentation, and mis-briefing MP’s, Ministers and the police, as possibly holding themselves to ‘the highest standards’. This self-apologist is spouting complete drivel.
    The APPG set up by Guto Bebb MP to support Connaught investors will, we are told, critically review the behaviour of the FCA, what it knew and when it knew it, what it did, and unravel the lies it has been told by the FCA to date.
    It is simply ‘not on’ that the FCA dresses up misappropriation, theft and fraud by regulated entities Capita and Bluegate as a mis-sold investment. It is also not on that the FCA ‘asks’ the FOS to uphold all of the coerced investor complaints, whatever the investor circumstances, with the intent of claiming against the IFA’s. These guys were also misled and defrauded by Capita and Bluegate. The FCA behaviour is simply despicable and self-protectionist.
    Fraud, Capita and public procurement were the three statements stapled together in the recent Connaught Westminster Hall debate and this the occasion when Andrea Leadsom was so spectacularly mis-briefed.
    If the FCA is at all sincere about applying ‘the highest standards’ to the way it operates, this would be as good a place to start.
    I clearly still believe in Father Christmas, the Tooth Fairy and the Easter Bunny.
    The FCA response is one of guilt (and they know it). They were caught out. They do not want that to happen to them again so they will do anything to use their powers to protect themselves, even if this means putting IFA’s into bankruptcy over Connaught.
    ‘The Highest Standards’ – ‘in your dreams’. Pigs in troughs.
    Time for a change. Dismantle the FCA. It really is simply not fit for purpose.

  16. Why are you not posting my submission:

    Almost as good as having one person responsible for regulation of RBS before the financial crisis.
    So this Mr Davis also makes a number of recommendations about changes to FCA systems, processes and ways of working. The FCA accept all recommendations and confirm they are now implementing them. It really does sound as though those involved entirely lost the plot. MIB’s comments and observations are excellent.
    This is the amusing part (or would be if they did not perpetrate so much injustice) – ‘As a regulator we hold ourselves to the highest standards’, and ‘the FCA will learn the lessons and we will do our utmost to ensure that a situation like this will never happen again.’ Which I think broadly translates as ‘get caught again’. Not a whiff of an apology. No, we don’t do that!
    How is it possible that this regulator is so unchecked and unaccountable that it considers their toolkit and modus operandi of lying, misrepresentation, and mis-briefing MP’s, Ministers and the police, as possibly holding themselves to ‘the highest standards’. This self-apologist is spouting complete drivel.
    The APPG set up by Guto Bebb MP to support Connaught investors will, we are told, critically review the behaviour of the FCA, what it knew and when it knew it, what it did, and unravel the lies it has been told by the FCA to date.
    It is simply ‘not on’ that the FCA dresses up misappropriation, theft and fraud by regulated entities Capita and Bluegate as a mis-sold investment. It is also not on that the FCA ‘asks’ the FOS to uphold all of the coerced investor complaints, whatever the investor circumstances, with the intent of claiming against the IFA’s. These guys were also misled and defrauded by Capita and Bluegate. The FCA behaviour is simply despicable and self-protectionist.
    Fraud, Capita and public procurement were the three statements stapled together in the recent Connaught Westminster Hall debate and this the occasion when Andrea Leadsom was so spectacularly mis-briefed.
    If the FCA is at all sincere about applying ‘the highest standards’ to the way it operates, this would be as good a place to start.
    I clearly still believe in Father Christmas, the Tooth Fairy and the Easter Bunny.
    The FCA response is one of guilt (and they know it). They were caught out. They do not want that to happen to them again so they will do anything to use their powers to protect themselves, even if this means putting IFA’s into bankruptcy over Connaught.
    ‘The Highest Standards’ – ‘in your dreams’. Pigs in troughs.
    Time for a change. Dismantle the FCA. It really is simply not fit for purpose.

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