One of the most senior officials at the Financial Conduct Authority is to step down as the City regulator faces criticism of the way it handled the announcement of an investigation into the insurance sector.
Clive Adamson, head of supervision, is preparing to quit days before the regulator publishes a report into events in March which led to £6bn being wiped off the stock market value of insurance companies. The FCA refused to comment .
The dramatic plunge in the shares of leading insurance companies followed a report in the Daily Telegraph which quoted Adamson.
The report said the FCA was planning to review 30m policies going back decades and was considering scrapping policy exit fees.
Six hours later the FCA clarified the scope of the inquiry into the treatment of long-standing customers, saying it would not look at 30m individual policies or at removing exit fees.
The events infuriated George Osborne who wrote to the FCA’s chairman, John Griffith-Jones, to tell him the regulator should consider disciplinary action against staff.
The FCA commissioned an inquiry from lawyers at Clifford Chance, the findings of which are due to be published next week. Osborne set out seven questions to be answered, including who had authorised the briefing and “where senior accountability should lie and what disciplinary action should be taken”.
Adamson’s impending departure is said to be unconnected to the report by Clifford Chance partner Simon Davis.
Martin Wheatley, chief executive of the regulator, has described the events in March as “not the FCA’s finest hour”.
The FCA was also under pressure last night over another issue – the way it is handling compensation payments to customers mis-sold interest rates swaps by the banking industry.
In a debate in the Commons, MPs lined up to raise problems faced by their constituents about the sale of the products, some of which were sold to businesses which subsequently collapsed or face financial difficulty. In some cases they incurred charges if they wanted to remove themselves from the arrangements.
Guto Bebb, a Conservative MP who chairs the all-party parliamentary group on interest rate swap mis-selling, called for more transparency over how the terms of the payouts had been agreed by the regulator. Some 10,000 small businesses out of 29,000 are missing out on compensation because they are deemed to have been sophisticated enough to have understood the products they were being sold or were too large to be included.
Ian Gordon, banks analyst at Investec, said he could not recall a debate in parliament on any issue which had unified opinion across all political parties. “We heard complete unanimity in today’s backbench debate on the FCA redress scheme for mis-sold interest rate hedging products. Interventions from all sides of the house expressed outrage at the conduct of banks in general, and [Royal Bank of Scotland] in particular, and frustration at the FCA’s inability or unwillingness to address outstanding issues,” he said.
The FCA said it was confident that the compensation offers being made were reasonable and fair. Some £1.5bn had been paid out to 10,000 small businesses, it added.
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