Osborne mauls regulator over insurance mistake

CHANCELLOR George Osborne slammed last week’s fumbled announcement of a Financial Conduct Authority (FCA) investigation into the insurance sector as an “egregious error” yesterday, speaking in front of a panel of MPs.

During a quizzing from the MPs on the Treasury Select Committee, Osborne said that he was also “profoundly concerned” about the incident. Last week a journalist was told that the regulator would be opening up a new insurance investigation, causing a major market reaction. The FCA’s response and clarification was delayed for hours, during which time several firms’ share prices dropped.

Chief watchdog Martin Wheatley apologised for the remarks, but Osborne said in a letter that the FCA must hold itself “to at least as high standards as it would expect of a listed company handling highly market-sensitive information.”

The chancellor was also questioned on allegations made by former Co-op Bank chairman Paul Flowers, who was arrested last year on drugs allegations. Flowers said that political pressure was applied to the bank to buy Lloyds branches, an aborted deal that exposed the bank’s major capital shortfall.

Osborne insisted, as the Treasury previously has, that no pressure was placed on either bank and that both were left to make decisions on a commercial basis.

The committee also asked questions about the budget and the UK’s long term economic health, with Osborne promoting his reforms to investment allowances.

The chancellor also said that the UK had “found itself in a situation in which it was overly dependent on mature markets” and needed to continue moving to export to faster-growing nations in the developing world.

He added: “Britain’s economic future cannot be borrowing money from the Chinese to buy things that the Chinese make for us... Britain headed down that road but it was a mistake.”