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.