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The Financial Conduct Authority has mistakenly revealed information about plans to review an insurer, dealing a blow to the UK’s financial watchdog as it tries to ease City concerns about proposals to “name and shame” more of the companies it investigates.
A contract notice for an independent review of the insurer’s “product oversight and governance” was posted on the government’s contracts finder website by the FCA on December 20.
The slip-up risks denting confidence in the regulator’s handling of confidential information at a time when it is already trying to defuse concerns in the City of London and among politicians over contentious proposals to reveal more about the identities of companies under investigation.
The FCA has responded to the criticism by partially backtracking on its plans by saying in November that it would give businesses more notice before disclosing that they were being investigated and would use a stiffer public interest test before doing so.
“We made a mistake by publishing this firm’s name and we have apologised,” the FCA said of the notice for the review. “We use skilled person reviews as a day-to-day part of our firm supervision. The fact of a review does not indicate any wrongdoing, which is why they are generally kept confidential.”
The FCA’s supervision powers are separate from its enforcement powers, and so-called Section 166 or skilled person reviews are an important part of the FCA’s supervisory toolkit. The regulator’s website says they are used when it is “concerned about aspects of a regulated firm’s activities or want further analysis”.
The FCA can tell a company it oversees to appoint a skilled person — usually from a panel of preapproved auditors and other companies — to conduct the review or appoint one itself.
The watchdog often publishes a notice on the government’s website when looking to hire a company to conduct skilled person reviews.
But the regulator is supposed to anonymise the notice in order to keep the identity of the business under review confidential.
In this case, the FCA named the subject of the review in a notice published on the government’s contract finder website. The notice was withdrawn in the past few days after the FT asked about it.
The £299,997 contract was awarded to Big Four firm Deloitte, which sits on the preapproved list for such reviews.
Deloitte would provide “business and management consultancy” and prepare a report on the insurer’s governance, according to the notice. Deloitte declined a request for comment.
The costs of the review, which began in December and will run through to March 2025, are paid for by the company being reviewed.
The skilled person review was one of 42 commissioned by the FCA between March and December, of which 10 were for insurance companies, the regulator said. That indicates a slowdown, after it commissioned a total of 83 such reviews in the year to March 2024.
The total annual cost of such reviews has been between £30mn and £40mn over the past five years.
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