One year on from its inception, the Financial Conduct Authority (FCA) has got itself into trouble. The regulator was lambasted by Chancellor George Osborne this week for causing a slump of up to 20% in insurers' share prices last Friday.
On Friday morning a report appeared in The Daily Telegraph saying that the FCA planned to review around 30 million pensions and life insurance policies sold from the 1970s onwards. Worried investors promptly ditched their insurance shares, concerned about the potential for wide-ranging compensation claims.
It wasn't until the early afternoon that the FCA clarified that the scope of the probe would be much narrower than originally reported. The FCA admitted that the fiasco was "not its finest hour".
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What the commentators said
This is an "extraordinary" affair, said Dominic O'Connell in The Sunday Times. The FCA is supposed to "prevent false markets in share prices, not create them". Life insurers have plenty to answer for, including their "abysmal investment performance" and "bloated charges". But allowing share prices to crash on unjustified fears of a regulatory crackdown is "unacceptable".
Why talk to a newspaper about a review not due to be announced until the following week? asked Nils Pratley in The Guardian. "It looks as if the regulator was chasing headlines" in a wish to be seen as more active than its predecessor, the Financial Services Authority. "Regulators play such games at their peril."
Nor does the FCA seem to have understood what a mistake it was to give an exclusive briefing to one newspaper, even though it was clear how prices would react. Now that the chancellor has waded in, chief executive Martin Wheatley's days look numbered.
The insurance industry has wasted no time in calling for Wheatley's head, said James Moore in The Independent. "Please." When was the last time a life insurance executive resigned after something went wrong on their watch? Any blood on the floor from this affair will be a mere drop compared to "the vats life insurers spent sucking from their unfortunate clients".
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