The U.K. markets regulator said its outside lawyer is investigating who authorized a March press briefing for a story that sent shares in insurance companies tumbling.
Simon Davis, a litigation partner at Clifford Chance LLP hired by the Financial Conduct Authority last month, will address how the regulator handles the disclosure of price-sensitive information, whether it realized the information would move the market, and how it reacted, the FCA said in a statement today.
“The credibility and integrity of the regulator is at stake,” Andrew Tyrie, the chairman of the U.K. Treasury Select Committee, said in a separate statement. “So are the needs of consumers of financial services, who must be able to rely on the competence of their regulator.”
The FCA was criticized by lawmakers and insurance companies alike for taking several hours to clarify a March 28 report from the Daily Telegraph newspaper that it would review 30 million life-insurance policies stretching back to the 1970s. U.K. insurers, including Prudential Plc (PRU), Aviva Plc (AV/) and Resolution Plc, had as much as $4.2 billion wiped off their market value.
Shares recovered later that day when the watchdog said it only intended to review a sample of firms, rather than each policy, and wouldn’t apply current standards retroactively. The FCA said it intends to examine how customers in the life-insurance market have been treated.
Tyrie, who called the FCA’s guidelines on what will be reviewed “a welcome step forward,” said the committee will call Davis to give evidence when the probe is complete.
The regulator didn’t give a timeline for the report.
“The aim is to publish the final report as quickly as is reasonably possible, bearing in mind the time needed by Simon Davis to complete his investigation and allow any individuals subject to potential criticism an opportunity to make representations,” the FCA said.
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