Watchdog under pressure after insurance firm fiasco
THE CITY watchdog will come under renewed pressure from insurers today demanding urgent action from George Osborne to prevent a repeat of the regulator’s mis-step that led insurance shares to plunge on Friday.
The industry will write to the chancellor to raise “serious concerns” about the disclosure of information by the Financial Conduct Authority (FCA) regarding a review into so-called zombie life and pension policies.
The insurance industry, through its trade body the Association of British Insurers, will question the FCA’s decision to issue market sensitive information to the media on Friday.
The FCA was forced to issue a clarification to confirm it would be conducting supervisory work looking at how people in closed accounts are treated.
Shares recovered slightly but critics accuse the FCA of creating a false market in the period leading up to the clarification. Insiders say senior industry executives were “apoplectic” with anger over the issue.
The FCA is set to outline more information about the probe today alongside investigations into banks’ IT systems, consumer credit and lenders’ support for fraud victims. The watchdog’s annual business plan will set out its key priorities for the year.
The business plan is also expected to ask for an above-inflation three per cent rise in the watchdog’s budget to just under £450m, Sky News reported last night.
The IT investigation comes after a series of payments system failures at RBS and Lloyds. The FCA is also worried that some lenders are refusing to refund their customers who have fallen victim to fraudsters.
Its review seeks to make sure customers are treated fairly and do not face an unreasonable burden of evidence in proving they are not at fault.
And the regulator is also looking into log book loans – credit provided to borrowers, using their car as security.
The probe will be the FCA’s first into the consumer credit market, as it gains control over the sector in April.