LONDON, April 8 (Reuters) - Britain’s insurance industry has called for a fully independent inquiry into last month’s pre-release by the financial watchdog of plans for a review of aspects of the way the sector handles some of its pensions and savings clients.
The premature disclosure to a newspaper sparked a sharp fall in shares in insurers including Aviva, Prudential and Legal & General and has already been described by Martin Wheatley, head of the Financial Conduct Authority (FCA), as “not our finest hour”.
The FCA had told a newspaper of its plans, which involve an investigation into whether people locked into some 30 million pension and other savings plans sold by insurance firms in the 30 years after 1970 are treated fairly compared with new clients.
The watchdog did not itself clarify the nature of its review until more than six hours after the start of trading on the London Stock Exchange.
The Association of British Insurers (ABI) said in a letter to the FCA, released to the media on Tuesday by parliament’s Treasury Committee, that it has serious concerns about what appeared to have been premature and selective disclosure.
The watchdog had said an investigation into its handling of the news would be carried out by its board with an external law firm. But the ABI said it wanted an independent probe, saying the watchdog “cannot be permitted to investigate itself”.
“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 was quizzed about the incident by the Treasury Committee on Tuesday. Britain’s finance minister George Osborne and Committee members have already called for an independent investigation.
The FCA said it will announce the terms of reference for the investigation as soon as possible. Its Chairman John Griffith-Jones wrote to Osborne on April 1, saying the investigation will be “done by an external legal firm and will be independent of the executive”.
The ABI said the best way to make changes in the market was through collaboration with the industry, which he said was not trying to shy away from reviews into its activities.
“In that context, it is important that the FCA’s media strategy is, and is seen as being, consistent with its stated intent of working collaboratively with the industry,” the ABI said. (Editing by Clare Hutchison and David Holmes)