News of probe sparked sharp drop in insurers’ share prices

Chancellor George Osborne has written to FCA chairman John Griffith-Jones criticising the regulator’s handling of its new life insurance probe.

The probe, which will look at old life insurance business on insurers’ books, was revealed by the Telegraph on Friday, and the news triggered a sharp drop in life insurers’ share prices.

The FCA issued a clarification after the story broke, saying it was not examining the 30 million old life policies individually, but was focusing on the fair treatment of policyholders.

The regulator came under fire last week for taking six hours to clarify the story.

Osborne wrote that he was “profoundly concerned” by the way the story leaked out, adding that disciplinary action against those responsible might have to be taken.

The Financial Times reported that some insurers’ share prices fell more than 20% last week after the Telegraph unveiled the probe.

The FCA board has ordered an independent enquiry. The Financial Times quoted FCA chief executive Martin Wheatley as saying that the probe leak “was not the FCA’s finest hour”.

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