By Jonathan Davies
The UK’s financial regulator created a ‘false market’ in the shares of life insurers, according to a group of MPs.
The Commons Treasury Select Committee said the Financial Conduct Authority (FCA)’s mishandling of a pre-briefing of its life insurance review was a serious error.
Comments made by an FCA official caused shares in life insurance companies to plunge. Aviva, Legal & General and Prudential were some of the worst affected after Clive Adamson, the head of supervision, said in a newspaper interview that the FCA would investigate whether or not people were being unfairly locked in pension plans.
It prompted fears over insurers’ profits and some even sold their shares.
The Commons Treasury Select Committee said the comments created a “major self-inflicted distraction” from the purpose of the investigation.
Andrew Tyrie, chairman of the committee, said: “By effectively breaching its own listing rules, the FCA itself created a false market in life insurance shares. Had a regulated firm behaved as the FCA did last March, the FCA is likely to have imposed a considerable fine.”