MPs call for independent inquiry into FCA's insurance bungle

Investors threaten to sue watchdog over the wild gyrations in insurers' share prices

The influential chairman of the Treasury Select Committee last night demanded that an investigation into the City watchdog's disastrous handling of the announcement of an inquiry into millions of old life insurance policies be kept "wholly independent of the regulator".

Andrew Tyrie was speaking after the Financial Conduct Authority had come under fresh attack before MPs on his committee.

Otto Thoresen, the chief executive of the Association of British Insurers, said that vital trust between industry, government and regulator was damaged by the way the regulator allowed details of the inquiry to emerge through a newspaper interview.

"What we have had in this period has not been helpful towards that. 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," he told MPs.

"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."

It took the watchdog six hours to issue a clarification on the scope of the inquiry – which will look at whether policyholders are being treated fairly – after fears were stoked that insurers might have to review 30 million policies. Investors have claimed that a false market was created in their shares.

But Mr Thoresen said he was "not looking for heads to roll" over the affair.

The investigation will be handled by Simon Davis from City law firm Clifford Chance. Mr Tyrie said MPs would take evidence from him after the publication of his report.

At the hearing the affair was described by Mr Tyrie as "a blunder" on the part of the FCA. It has led to calls for the resignation of the FCA's chief executive Martin Wheatley from industry figures, although the interview was given by Clive Adamson, head of supervision. (Mr Adamson had earlier shot to prominence after it emerged that he had approved the appointment of the now disgraced Paul Flowers as chairman of Co-op Bank.)

The ABI wrote to the Chancellor, George Osborne, to express its unhappiness. There has even been talk that some investors could sue the FCA over the wild gyrations in insurers' share prices on the day of the interview's publication last month. Mr Thoresen said he did not know whether there would be grounds for this. "We will have to wait for the FCA's review," he said.

The sector's shares had already been under pressure after Mr Osborne shocked the industry by announcing plans to end the requirement on pensioners to use their savings to take out an annuity.

Mr Tyrie said the market had been in "a shocking mess" prior to the announcement, with pensioners facing pitifully low rates. Mr Thoresen blamed all-time low gilt yields and the fact that many people are living for 25 to 30 years after their retirement. He said the market had been improving and innovating.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
Markus Persson: If being that rich is so bad, why not just give it all away?

That's a bit rich

The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

Coleman on course to end half a century of hurt for Wales

Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
Rugby World Cup 2015: The tournament's forgotten XV

Forgotten XV of the rugby World Cup

Now the squads are out, Chris Hewett picks a side of stars who missed the cut
A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past
The Queen has 'done and said nothing that anybody will remember,' says Starkey

The Queen has 'done and said nothing that anybody will remember'

David Starkey's assessment
Oliver Sacks said his life has been 'an enormous privilege and adventure'

'An enormous privilege and adventure'

Oliver Sacks writing about his life
'Gibraltar is British, and it is going to stay British forever'

'Gibraltar is British, and it is going to stay British forever'

The Rock's Chief Minister hits back at Spanish government's 'lies'
Britain is still addicted to 'dirty coal'

Britain still addicted to 'dirty' coal

Biggest energy suppliers are more dependent on fossil fuel than a decade ago