Chancellor joins the fray over 'damaging' FCA probe leak

An FCA probe into 30 million insurance policies going back to the 1970s was revealed by FCA director of supervision Clive Adamson in an interview in the Telegraph last Friday, ahead of a planned release on Monday.

The revelation sparked heavy losses in some insurers' share prices. The four biggest fallers on the FTSE 100 at the close of trading on Friday were Resolution, which was more than 7% lower, Legal & General, Aviva and Prudential.

In light of the reaction, Chancellor George Osborne has written to FCA chairman John Griffith-Jones to say he is "profoundly concerned" by events that caused "considerable disruption" in the trading of insurance company shares.

"These events go to the heart of the FCA's responsibility for the integrity and good order of UK financial markets, and have been damaging both to the FCA as an institution and to the UK's reputation for regulatory stability and competence," the letter said.

The chancellor added that he expects Griffith-Jones and the FCA board "to do everything possible to make good that damage".

The regulator has already announced that its board will be calling on the assistance of external lawyers to assess its handling of the entire affair.

Osborne welcomed the FCA review, and said the "starting point must be that the FCA holds itself to at least as high standards as it would expect of a listed company handling market sensitive information, and should hold its own staff to the same standards as it would expect of any approved person".

Questions such as the need for disciplinary action for individuals should be considered - and be seen to be considered - in this spirit, he added.

However Treasury Committee chairman Andrew Tyrie has said the FCA's proposed inquiry is not enough, and called for an independent review into what he branded an "extraordinary blunder".