UK watchdog's handling of insurance review 'not finest hour'

LONDON Mon Mar 31, 2014 11:11am EDT

The logo of the new Financial Conduct Authority (FCA) is seen at the agency's headquarters in the Canary Wharf business district of London April 1, 2013. REUTERS/Chris Helgren

The logo of the new Financial Conduct Authority (FCA) is seen at the agency's headquarters in the Canary Wharf business district of London April 1, 2013.

Credit: Reuters/Chris Helgren

LONDON (Reuters) - The UK financial watchdog's handling of information about a planned review that sparked a slump in insurance company shares on Friday was not its "finest hour," its chief executive said.

Martin Wheatley said on Monday he takes responsibility for what happens at the Financial Conduct Authority (FCA), which has come under fire from the chairman of parliament's Treasury Committee.

Committee chairman Andrew Tyrie said on Saturday the FCA's actions seemed to be an "extraordinary blunder".

The FCA on Friday appointed an external lawyer to examine how the watchdog released news earlier that day of a planned review into whether people locked into 30 million pension and other savings plans sold by insurers were treated fairly compared with new clients.

Shares in top insurers fell sharply on speculation the probe could lead to changes that affect the profitability of the products.

"Whenever markets move like they did on Friday there is always scrutiny," Wheatley, told a conference in London on Monday.

"This was clearly not the FCA's finest hour," Wheatley said

He later told reporters that the external review into the FCA's conduct will be concluded as quickly as possible.

Shares in listed life insurance companies rebounded on Monday after the FCA published its business plans for the year, confirming the probe would be less disruptive than investors first feared on Friday.

Resolution was up 2.3 percent, Legal & General advanced close to 1 percent, while Aviva climbed 1.5 percent by early afternoon trading, all outpacing their benchmark FTSE 100 index which was 0.3 percent higher.

A senior board member of a FTSE 100 insurer said: "The FCA plan that came out today seems pretty benign and I wouldn't have expected any reaction to this had it not been for what happened on Friday."

(Reporting by Huw Jones; Editing by Erica Billingham)