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Four of watchdog staff forfeit bonus

FCA accused of ‘inadequacies’ over insurance fiasco

Martin WheatleyThe financial services regulator was criticised today for a “seriously inadequate” response to the collapse in shares of insurance companies in March.

Values fell as investors pulled out following a report in a national newspaper that the Financial Conduct Authority would be investigating the companies’ handling closed pension funds.

Amid fears of huge compensation payouts, shares in a number of blue chip firms, including Aviva, Legal & General, Prudential plummeted after a report appeared in the Daily Telegraph.

Clifford Chance lawyer Simon Davis, who was appointed to lead an inquiry, today castigated the FCA for taking six hours to respond to the freefall, although its head of supervision Clive Adamson, who was quoted in the article, was cleared of any blame.

Davis said the briefing to the newspaper was “high risk, poorly supervised and inadequately controlled. When it went wrong, the FCA’s reaction was seriously inadequate and fell short of the standards expected of those it regulates. As well as errors by individuals, the report identifies a number of shortcomings in the FCA’s systems and ways of working.”

Adamson and Zita McMillan, the head of communications, have left the watchdog. Head of markets David Lawton was also criticised in the report, but he will stay on.

The inquiry found chief executive Martin Wheatley (pictured) was “disadvantaged by the failures” of Adamson, Lawton and McMillan, and said he should take credit for coordinating a public response, although this should have been faster.

Wheatley, Adamson, McMillan and Lawton will forfeit their right to their annual bonus.

The FCA said its has improved how it identifies, controls and releases price-sensitive information.

“The board fully accepts Mr Davis’ criticisms and on behalf of the FCA we apologise for the mistakes that were made”, said FCA Chairman John Griffith-Jones.


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