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View the article online at http://citywire.co.uk/wealth-manager/article/a744516

Insurers consider legal action over FCA 'potential market abuse'

by David Campbell on Apr 03, 2014 at 07:48

Insurers consider legal action over FCA 'potential market abuse'

Six of the UK’s biggest insurance businesses are taking legal advice about the Financial Conduct Authority’s announcement last week that it would review the management of historical policies.

The leak of the story to the Daily Telegraph last Friday knocked shares in insurance businesses by as much as 10%. Chancellor George Osborne said this week he was ‘concerned’ by the circumstances of the announcement, which he said had damaged the reputation of the FCA.  

City law firm Slaughter & May has produced a legal briefing on three potential allegations of market abuse related to the sharp falls in shares, according to the Financial Times.    

‘There are sufficient grounds here for an investigation into potential market abuse,’ the statement notes.

Smaller pensions and insurance businesses such as Resolution and Phoenix, which specialise in managing old policies lost more than 10% on Friday morning, with larger businesses such as Legal and General and Aviva falling by around 5%.

Having sharply fallen in early trading, much of the losses were made back after the FCA clarified the extent and scope of its investigation, but the regulator has faced criticism that it took until the mid-afternoon to formally respond to the story.

3 comments so far. Why not have your say?

Pramatist

Apr 03, 2014 at 08:13

Any other private entity would receive official, public censure and face the prospect of financial penalties.

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CoeurDeLion87

Apr 03, 2014 at 08:50

Essentially it has proved impossible for '000s of private brokers, smaller fund managers, etc to take legal redress from any UK regulator since 1986. Many have been unfairly targeted by TSA, SFA, FSA & now FCA and in many circumstances regulators have not felt it necessary to reimburse for clear regulatory failures & infringements. Although these insurers have a good case and a heavy-weight law firm behind them it is unlikely that FCA can be sued on any basis due to its statutory status. If these insurers do make some headway though then there really needs to be a proper PUBLIC ENQUIRY into how regulators have been allowed to crush '00s of firms in the last decades covering the clear dictatorial approach that has replaced supposed soft touch regulation. Welcome to the wake up call. Is it any wonder that FCA are making these errors now? The weight of regulations was bound to create a monstrosity sooner or later.

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Cynical Brit

Apr 03, 2014 at 09:41

Yet more incompetence from our glorious regulators. Good luck to the Insurance companies but I'm sure they will be "warned off" from taking it any further. I seem to remember a very very quiet and secretive enquiry into the Lloyds takeover of HBOS. Will the truth ever come out I wonder

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