Banks, Financial

Banking app targets millennials who want help budgeting

Graduate debt, rent and high living costs have made it hard for millennials to save for a house, a pension or even a holiday. For Ollie Purdue, a 23-year-old law graduate, this was reason enough to launch Loot, a banking app targeted at tech-dependent 20-somethings who want help to manage their money and avoid falling […]

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Eurozone inflation climbs to highest since April 2014

A welcome dose of good news before next week’s big European Central Bank meeting. Year on year inflation in the eurozone has climbed to its best rate since April 2014 this month, accelerating to 0.6 per cent from 0.5 per cent on the back of the rising cost of services and the fading effect of […]

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Wealth manager Brewin Dolphin hit by restructuring costs

Profits at wealth manager Brewin Dolphin were hit by restructuring costs as the company continued to shift its focus towards portfolio management. The FTSE 250 company reported pre-tax profits of £50.1m in the year to September 30, down 17.9 per cent from £61m the previous year. Finance director Andrew Westenberger said its 2015 figure was […]

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Travis Perkins and Polymetal to lose out in FTSE 100 reshuffle

Builders’ merchant Travis Perkins and mining company Polymetal face relegation from the FTSE 100 after their recent performances were hit by political events. The share price of Travis Perkins has dropped 29 per cent since the UK voted to leave the EU in June, as economic uncertainty has sparked concerns among some investors about the […]

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RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Categorized | Insurance

FCA chief says zombie probe ‘not finest hour’

Posted on March 31, 2014

Martin Wheatley, CEO of the FSA, photographed at their office in Canary Wharf today.©Charlie Bibby

Martin Wheatley, head of the FCA

The UK’s chief financial watchdog admitted his organisation faces serious questions after confusing reports about a new insurance inquiry led to “extreme movements” of more than 20 per cent in some sector share prices last week.

Martin Wheatley, chief executive of the Financial Conduct Authority
, said the organisation’s handling of its plans to examine zombie insurance funds was “not the FCA’s finest hour”.

    The regulator’s board has already ordered an independent probe of the episode and Mr Wheatley said that as CEO he expected to be personally affected by the inquiry.

    The gyrating share prices caused by the zombie inquiry reports have also triggered concern elsewhere in government, with one Treasury official on Monday describing them as “extremely serious,” adding “clearly we need to get to the bottom of what happened”.

    Andrew Tyrie, chair of the Treasury select committee, has said the episode was an “extraordinary blunder”.

    The FCA provoked fury among insurers and investors on Friday because it waited for six hours after the stock market opened to make clear that the scope of the probe was much narrower than originally reported in the Daily Telegraph. The initial report sparked fears of a wide-ranging investigation into 30m policies and led to hundreds of millions of pounds being wiped off the sector’s market capitalisation.

    The FCA later said it did not plan to review all those individual policies or retrospectively impose current standards on old contracts. Its board then called in external lawyers to look at its actions.

    Mr Wheatley said on Monday that he took responsibility for what happened in his organisation.

    He said: “Whenever markets move as they did on Friday, scrutiny rightly follows, and it is no different for the FCA as for any other firm. If firms were involved in events like this, like those we saw prior to the weekend, we would ask serious questions. It is now incumbent on us to answer the same questions.”

    Lombard: FCA boss should stay on

    Jonathan Guthrie

    FCA boss Martin Wheatley is rocking back on his heels but he has not yet passed the tests for a private sector chief executive to step down, writes Jonathan Guthrie.

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    The insurance probe was one element of the FCA’s business plan, which was published in full on Monday morning. In the document, the FCA proposed a 2014/5 budget of £452m, up 1 per cent from the previous year. It also made a special funding request of £41m to cover its new responsibilities for overseeing consumer credit.

    The watchdog warned that the growth of consumer credit may pave the way for “unaffordable debt” in the UK and vowed to scrutinise areas including credit card lending, overdrafts, payday lending and debt management advice.

    The FCA this year takes on powers to oversee 50,000 consumer credit providers for the first time – doubling the number of firms it regulates.

    The UK household debt-to-income ratio has fallen to under 140 per cent from a peak of 170 per cent, but the FCA warned that further debt accumulation would leave households vulnerable to “interest rate changes, incomes shocks and changes to credit conditions.”

    The watchdog also said it was planning to shine a spotlight on how investment banks handle flows of confidential information within their own organisations, as well as how they manage conflicts of interest and curb the scope for traders to manipulate prices and benchmarks.