Share prices tumbled after misleading information given to press

FCA head Martin Wheatley faces calls to resign after inaccurate information about its plans to look into closed life insurance policies was given to the press by a senior official.

The regulator’s director of supervision Clive Adamson told the Telegraph on Friday that it planned to review 30 million life insurance policies sold between the 1970s and early 2000s.

The market reaction to the story wiped billions of pounds from the value of life insurers.

It took the regulator more than six hours to issue a clarification that it was not planning to individually review 30 million policies, but rather embarking on supervisory work about the fair treatment of life insurance customers.

“This is not a review of the sales practices for these legacy customers and we are not looking at applying current standards retrospectively,” the statement said.

“As a forward-looking regulator, we want to examine areas that are of interest and relevance to consumers and to firms and assess whether there is an issue that requires any action. No conclusions have been reached as work has not started.”

Share prices bounced back after the statement, confirming fears that the market was trading on inaccurate information.

Senior sources at four of Britain’s biggest insurers told The Sunday Times that Wheatley’s position is untenable.

Select committee chair Andrew Tyrie said: “On the face of it, this is an extraordinary blunder.

“It is crucial that we have a full and transparent explanation about how such an apparently serious mistake came to be made by our financial services watchdog - the body appointed by parliament to enforce high standards of conduct.”

The FCA board plans to bring in an external law firm to review how the press coverage was handled.