The Financial Conduct Authority came under fresh attack after the insurance industry’s chief representative told MPs that vital trust between industry, government and regulator was damaged by its disastrous handling of a probe into old life-insurance policies.
But Otto Thoresen, chief executive of the Association of British Insurers, said he was “not looking for heads to roll” over the affair, following calls from some in the industry for the leader of the Financial Conduct Authority, Martin Wheatley, to step down.
The controversy was sparked when the watchdog’s director of supervision, Clive Adamson, chose a press interview to announce a review of old life-insurance policies.
The move sparked a rout on the stock market, with insurers’ share prices plunging only to partly recover when the FCA issued a clarification over the scope of the review six hours later.
Thoresen today told MPs on the Treasury committee that the industry desperately needed “a relationship of trust between the regulator, the industry and the Government”.
“What we have had in this period has not been helpful towards that,” he said.
“We didn’t have a press release. We didn’t have a report on which we could compare what was being said. Until we did it was very difficult.
“What we need to see is a regulator which is fair, which is balanced, which is objective.
“It is appropriate to have a bias to consumers. But it has to be in the right tone,” he added.
Thoresen said insurers knew the review was coming but they had been sworn to secrecy and had not been briefed on its nature.
The affair was described by Treasury committee chairman Andrew Tyrie at the hearing as “a blunder”.
The ABI wrote to Chancellor George Osborne to express its unhappiness and an FCA board-level review into the scandal has been set up with the help of a law firm.
The sector’s shares had already suffered a huge hit last month after Chancellor George Osborne shocked the industry by announcing plans to end the requirement on pensioners to use their savings to take out an annuity.
Thoresen described the decision as “a shock”.
Tyrie said the market had been in “a shocking mess” prior to the announcement with pensioners facing pitifully low rates.