Insurance industry should consider its own misdeeds as it bays for blood

 

Outlook: The insurance industry has scented its regulator’s blood and is positively drooling as a result. Its representatives want the Financial Conduct Authority’s (FCA) chief executive, Martin Wheatley, served up on a plate.

In case you missed it, the FCA’s director of supervision, Clive Adamson – the man who approved the disgraced Paul Flowers’s appointment as chairman of the Co-op Bank – blew the lid off plans for a review into the 30 million or so pensions and life insurance savings policies sold from the 1970s to 2000 in a press interview at the end of last week.

In short order, the thick end of £2.5bn was wiped from the sector’s shares as investors fled. It took six hours of market turmoil before a clarification was issued when the watchdog said it wouldn’t demand a review of all 30 million. It just wanted to be sure policyholders were being treated fairly.

The shares duly recovered (a bit) and a board-level investigation was announced into the FCA’s handling of the affair.

To add a bit of spice to the pot, it has just emerged that the watchdog is angling for a  3 per cent increase to its budget as part of its business plan.

One thing you can be sure of: just about every life insurance industry executive in Britain will be streaming Parliament TV live when Mr Wheatley next appears before the Treasury Committee. Its members don’t really go in for bear-baiting these days. This may be an exception.

But resign? Please. Cast your mind back. When was the last time you remembered a life insurance executive resigning as a result of something going wrong on their watch?

This, remember, is an industry that for many years treated consumers as marks to be ripped off, overcharged and generally mistreated. The interests of the shiny-suited salesmen that flaunted insurers’ wares often appeared to be of far more concern to them than the outcomes for their customers.

If there’s to be blood on the floor as a result of this affair the amount will resemble what you get from a finger prick compared to the vats life insurers spent years sucking from their unfortunate clients.

Things have been better recently, it’s true. Products are simpler, charges more bearable. But the industry had to be dragged kicking and screaming to get to this point.

Even then, it still has the capacity to behave shamelessly. Remember the way Prudential botched its attempt to take over the Asian insurer AIA? That cost shareholders hundreds of millions in break fees and led to a £30m fine because the company failed to let the Financial Services Authority know what was going on. What, you might ask, happened to the chief executive, Tidjane Thiam, as a result of all this? He got a bonus. 

Mr Wheatley has admitted this was not the FCA’s finest hour and that’s an understatement. The watchdog has egg all over its face and questions to answer. At the very least Mr Adamson had better not get a bonus this year. The same goes for others, too, if the FCA wants to set an example to the firms it regulates. 

But if the insurance industry people calling for Mr Wheatley’s head had any self-awareness they would realise that they are guilty lobbing bricks from glass houses.

Now its SocGen’s turn in  the crosshairs over Libya

 First it was Goldman Sachs, now SocGen finds itself in the legal crosshairs of the Libyan Investment Authority (LIA) over work done during Colonel Gaddafi’s misrule.

The Independent first revealed that the French bank would be the LIA’s second target in February and details of its claim have now been filed in the High Court. As expected, it makes for eye-opening reading. SocGen stands accused of helping to funnel bribes to close associates of Saif al-Islam, son of the late, unlamented, Colonel as part of its work for the LIA, Libya’s sovereign wealth fund, at the time.

As with Goldman, SocGen has trashed the claim and said it will contest it vigorously.

So the game of legal poker is now formally under way, but the hand will take an awfully long time to play out. Standard practice for banks facing any legal claim is to delay, obfuscate and generally tie the process up in red tape in the hope that their opponents run out of resources and/or energy.

The problem for the banks is that the LIA has an ace card in the hole: its ability to put yet more lurid allegations before the courts. The reporting of legal proceedings carries privilege. So those claims can be aired in public if this gets to court, and it doesn’t matter how outlandish the banks say they are (as long as their side is given a fair shake).

The difficulty facing the LIA, however, is that the banks may feel their reputation has sunk to such a degree that a little more dirt won’t matter all that much.

News of bonus cuts can’t be an April Fool – can it?

Britain’s biggest companies have, it seems, come over all conservative when it comes to bosses’ pay.

An analysis by the accountancy firm PricewaterhouseCoopers has found that companies with accounting year ends of  30 September 2013 paid bonuses averaging 1 per cent lower than in 2012. This, it says today, is the third consecutive year of  bonus cuts. Median total pay, including long-term incentive payouts that aren’t always very long term and are often used to quietly top up executives’ packages, increased by just 0.5 per cent.

Now, I’ve no reason to doubt the good accountant’s findings. But releasing such counterintuitive information on 1 April seems odd.

PROMOTED VIDEO
Arts and Entertainment
Stik on the crane as he completed the mural
art
News
Happy in his hat: Pharrell Williams
people
News
Phyllis Dorothy James on stage during a reading of her book 'Death Comes to Pemberley' last year
peopleJohn Walsh pays tribute to PD James, who died today
News
peopleExclusive: Maryum and Hana Ali share their stories of the family man behind the boxing gloves
News
i100(More than you think)
Arts and Entertainment
John Hurt will voice Prince Bolkonsky in Radio 4's War and Peace
radioRadio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
News
ebooksNow available in paperback
News
i100
News
people
News
Tony Blair and David Cameron side by side in 2006
people
News
news

Lincoln MP Karl McCartney 'denied all knowledge' of the Twitter activity

Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
filmDirector said film would 'never have been financed' with ethnic minority actors in key roles
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Argyll Scott International: Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Argyll Scott International: 2x Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Recruitment Genius: Senior Execution Trader

£30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

Citifocus Ltd: ACA - Financial Reporting

£Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...

Day In a Page

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

In pictures: There's a Good Girl exhibition

The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

UK firm Biscuiteers is giving cookies a makeover

It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
Can SkySaga capture the Minecraft magic?

Can SkySaga capture the Minecraft magic?

It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
The King's School is way ahead of the pack when it comes to using the latest classroom technology

Staying connected: The King's School

The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
Christmas 2014: 23 best women's perfumes

Festively fragrant: the best women's perfumes

Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

Arsenal vs Borussia Dortmund

The Ox celebrates century with trademark display of speed and intuition
Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

When two worlds collide

Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?