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FCA sets aside £1.7m for inquiry into closed book probe

The FCA has set aside £1.7m to carry out an inquiry into how it announced an investigation into closed book policies which sent insurers’ share prices tumbling back in March.

The Daily Telegraph reported in March 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. 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.

A freedom of information request, submitted by the BBC, has now revealed the FCA has been invoiced £116,845 so far by Clifford Chance, excluding VAT.

Based on a preliminary estimate, the regulator has set aside £1.7m from its 2013/14 annual accounts to cover the costs of the inquiry.

The annual accounts will be published next month.  The FCA will publish a final figure on total costs of the inquiry once it has been completed.

The FCA declined to comment further.

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Comments

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

  1. This should be funded by the FCA bonus pool.

  2. @ Ian

    Agree !!! but it will be interesting when the accounts come out next month what has been paid what and to whom !!!
    However, after said and done who actually pays for the FCA ? The Industry but ultimately the consumer does !!!

  3. £1.7m is an incredible sum just to investigate and establish why Clive Adamson prematurely let slip to the press something such as this. And what has Clifford Chance done thus far for the £116,845 for which it’s already billed the FCA? It’s hardly as if it’s had to analyse a 1,000 page dossier on the matter, is it? Adamson screwed up and caused a lot of upset, about which George Osborne wrote to Martin Wheatley demanding an explanation. It hardly seems to be something warranting an expenditure of £1.7m (of, as ever, OPM).

    Whatever happened to the regulator using its (our) resources in a way that gets the most value out of the effort that it makes, whilst delivering significant benefits to low risk and compliant businesses through better focussed inspection activity, increased use of advice for businesses, and lower compliance costs?

    Rampant profligacy is evidently still very much alive and well at Canary Wharf.

  4. In fact, £1.7m should be the maximum cost of the probe itself, not the cost of investigating how and why one man prematurely leaked it to the press.

  5. The Hound of the Compliancevilles! 16th June 2014 at 11:38 am

    Julian, is this a “leak” or is the investigation around the timing of the communication and its content?

    From what i have read so far i dont have the view this was regarded as a leak, possibly mis-reporting which could have been avoided if better comms has been issued by the FCA?

    I could be wrong…..

  6. Basically the FCA is a law unto itself and we should just be please they haven’t set aside 2mil because this appears to have been one of those think of a number and double it exercises we’ve seen many times before. They said; this was going to be a very different regulator from the FSA. Hands up those people who think the FCA is any different from the FSA in wasting money?

  7. As Julian Stevens points out it is difficult to understand how it can be so difficult, and expensive, to discover why clive adamson made this statement, when he did. You would have thought a couple of conversation would have sorted it out. If an IFA makes a mistake they have to pay for it themselves. If the FCA make a mistake we pay for that, as well.

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