No small wonder, then, that George Osborne is said to be fuming at the FCA's leaked news of a possible probe of legacy closed-life policies to a newspaper, a mistake that saw billions wiped from across the insurance industry last week. Mr Osborne has written it an angry public letter - others, like the Association of British Insurers, are said to be so incensed that they are screaming for its head, Martin Wheatley, to fall on his sword.
There is, of course, a delicious irony in Mr Osborne's annoyance over the disruption in the market for insurance shares, because he, too, was the source of market chaos a week or so earlier when he announced his far reaching reforms to the pensions market. I’m sure shareholders in Partnership Assurance would like to send their own angry letters to the chancellor.
But even though I personally felt that the consultation-free approach to major market reform was, while well intentioned, somewhat recklessly announced, it certainly wasn't illegal. There are, on the other hand, very clear rules about the distribution of price sensitive information of which the FCA should have been very aware. To enforce its own rules the FCA needs to abide by them.
Certainly the issue of selective or delayed disclosure is one which has dogged markets for years, with share prices frequently moving suspiciously in the build up to big announcements. Of course, there is no suggestion of insider trading in the case of the FCA’s blunder – but it makes no difference, because any early recipient of that information would have been able to profit; companies have been fined substantially for less.
It would, however, be churlish to ignore the good work the FCA has done in recent years in combating market abuse, even if under previous management it can quite justifiably be accused of being asleep at the wheel. In 2004, nearly a third of all mergers were preceded by suspicious price moves – fast forward to 2012, and a zealous enforcement programme has seen that fall to a record low of 15 per cent.
What's more Mr Wheatley's pragmatic approach to regulation has been of benefit to us all. RDR has shone a light on charges, the consequence being that investors are getting a better deal than ever. Good products have been left well alone and new exciting forms of investment like peer-to-peer lending are being provided the environment in which they can flourish. Sure the FCA deserves appropriate redress - but let’s also recognise the huge work it's done to improve London’s regulatory landscape and not throw the baby out with the bathwater.
