The heads of the Financial Conduct Authority have conceded that their organisation "screwed up" during the botched announcement of a review into life insurance products, but defended the watchdog's more aggressive approach since its foundation almost two years ago.
The FCA's chief executive Martin Wheatley and chairman John Griffith-Jones said that even though news of the probe into closed pension and investment policies led to plummeting share prices for the affected firms and a more "fractious" relationship with some insurers afterward, the watchdog's more vocal and assertive stance was proving effective.
"Notwithstanding that we screwed up on this day in question, the generic point is the industry values the point that we communicate and we're clear what we care about," said Mr Wheatley told the Treasury Select Committee.
The insurance investigation, first reported by the Telegraph in March 2014, knocked almost 3bn pounds from the market value of London-listed insurers in the six hours it took before the FCA clarified that the probe into closed-book policies would be narrower in scope than first thought.
The chaotic announcement led to a major restructuring at the FCA in December that saw head of enforcement Clive Adamson, head of authorisations Victoria Raffe and communications director Zitah McMillan step down. In the same month, the FCA announced that Mr Wheatley would not receive a bonus for the year.
Committee chairman Andrew Tyrie said on Tuesday that the FCA's blunder "broke its own listing rules, big time". The committee has held several hearings to determine what went wrong in the run-up to the announcement.
Mr Wheatley said the regulator needs to flag up its priorities and campaigns through the press, adding that 48pc of the 74,000 companies he oversees get most of their information on regulation from media channels rather than directly from the FCA.
"We send firms the information [but] we know that everybody's busy and that people's mailboxes get full and that people don't necessarily open or forward our communications," said Mr Wheatley.
In a barbed exchange, committee member Mark Garnier asked what this reliance on the media meant for the regulator's effectiveness.
"It probably tells me that they [regulated companies] think they know it all already, or they're too busy to read another document coming through," replied Mr Wheatley. "You're asking me why, to speculate on why they don't open their emails; I don't know. If we sent them an email asking them why, I don't suppose we'd get an answer."
FCA chairman John Griffith-Jones also came under criticism for the regulator's announcement, two weeks after the news, that it would be overseeing the investigation into what went wrong. Mr Tyrie said the wording suggested the FCA would be "marking your own prep" and described it as a "crackpot proposal, one guaranteed to hurt the credibility of the FCA".
Mr Tyrie also criticised Mr Griffith-Jones for writing to Simon Davis, the Clifford Chance lawyer who eventually carried out the investigation, to suggest minor amendments to his report before it was published.
However, Mr Griffith-Jones said the changes were only to protect confidential information and said he will show the letter to the committee. "I was slightly surprised, shall I say, when Mr Davis said we were to see the report, but having handed the entire process over to him I did not feel it was appropriate to say to him I'm now going to supervise how you do this report. I can absolutely assure you the best of my ability that the board felt that the recommendations could be marginally improved by specific [amendments]," said Mr Griffith-Jones.
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