The leaking of information on a planned insurance sector review was not the Financial Conduct Authoritys finest hour, its chief executive has admitted after the communications bungle sparked a slump in industry shares.
Martin Wheatley told the City Week conference in London that: 'Whenever markets move, as they did on Friday, scrutiny rightly follows and this is no different for the FCA.
'This was clearly not the FCA's finest hour but it does serve as a timely reminder of the importance to all parties involved in markets of the care and thought that is needed when handling the significant amounts of information we hold as a part of going about our day-to-day business.'
On March 28, the FCA provided the Daily Telegraph with details about a planned inquiry into whether millions of pensions and savings policyholders were 'exploited' or miss-sold products from the 1970s up to 2000.
The information was provided by Clive Adamson, the FCA's director of supervision, who also told the paper that the FCA was considering banning the steep exit fees that keep customers effectively locked into poor policies.
However, following this report, shares in top insurance firms fell sharply, igniting speculation that changes would affect the profitability of their products.
The FCA subsequently clarified its position in a statement, saying the exercise would focus on just a sample of policies.
'We will be reviewing a representative sample of firms who we expect to look at whether they are treating their customers fairly,' the statement read.
'We are not planning to individually review 30 million policies, nor do we intend to look at removing exit fees from those policies providing they were compliant at the time.
'This work will commence in the summer and we will be speaking to firms about how we can undertake that review.'
This debacle, however, was followed by criticism from a senior MP who accused the FCA of making an 'extraordinary blunder'.
Andrew Tyrie, chair of the Commons Treasury committee, said: 'It is crucial that we have a full and transparent explanations about how such an apparently serious mistake came to be made by our financial services watchdog.'
The FCA board announced that it would involve an external law firm in its investigation and would share the outcome of this work in due course. However, Tyrie said 'more than that is needed'.
On Monday, the FCA published its business plan for the year affirming that its review of the insurance sector would be less disruptive than anticipated last week.
In response, the Association of British Insurers said the regulator needed to take a forward-looking and long-term approach to regulation.
'In the current economic climate, for the FCA to operate as cost effectively as possible,' an ABI spokesman added.
