* FCA appoints Clifford Chance lawyer to lead inquiry
* Inquiry to be overseen by non-exec FCA committee
* Insurance industry says inquiry must be independent
(Adds lawyer appointment, ABI, Tyrie comment)
By Jemima Kelly and Huw Jones
LONDON, April 8 Britain's financial regulator
has appointed an independent lawyer to lead an inquiry into how
it prematurely disclosed details of a review of the insurance
industry, sending shares in insurance firms plunging last month.
The move follows complaints from the insurance industry
body, which called on the Financial Conduct Authority (FCA) to
learn lessons from the incident, but stopped short of demanding
the removal of senior staff.
When some of the review's details were published in a
newspaper last month, shares in insurers including Aviva,
Prudential and Legal & General fell sharply.
Insurance bosses were angered as they waited several hours for
the regulator to outline its full intentions.
The incident was described by Martin Wheatley, head of the
FCA, as "not our finest hour".
On Tuesday, the regulator said it had appointed Simon Davis,
a partner at law firm Clifford Chance, to conduct an inquiry
into the affair, which it added would be overseen by a committee
of non-executive FCA board members.
The FCA set out "terms of reference" for the inquiry which
followed closely what British finance minister George Osborne
laid out in a letter to the regulator last week.
It was not immediately clear, however, whether the inquiry
would satisfy the regulator's critics.
In a letter to the FCA sent on April 1 and released to the
media on Tuesday, the Association of British Insurers (ABI) said
the regulator "cannot be permitted to investigate itself".
It declined to comment when asked if it was satisfied with
the framework of the inquiry announced by the FCA on Tuesday.
"This is very much a situation in which even the perception
of a lack of objectivity or thoroughness could be damaging to
the FCA and its aims," ABI Director General Otto Thoresen said
in the letter.
Thoresen told a committee of lawmakers on Tuesday that he
was not seeking Wheatley's removal over the incident but
stressed "the importance of learning lessons" and was critical
of the FCA's slowness in clarifying its position.
"We didn't have a press release, we didn't have a report
against which we could compare what was being said," he told the
Treasury Select Committee. "And until we did ... it was very,
very difficult to give people confidence."
The committee's chairman, Andrew Tyrie, said it would
shortly be meeting the lawyer leading the FCA inquiry.
"It is vital that this investigation is wholly independent
of the regulator," Tyrie said in a statement.
Asked whether investors would have grounds for taking legal
action against the FCA over the incident, Thoresen said that was
"a definite question" but it would have to await the outcome of
the internal review of the FCA.
(Editing by Chris Vellacott and Mark Potter)