By Huw Jones
LONDON, Dec 10 (Reuters) - Britain's markets regulator waswrong to brief a reporter about an insurance sector review and"seriously inadequate" in how it reacted to an ensuing sell-offin insurance shares, an independent inquiry said on Wednesday.
Shares in Aviva, Legal & General, Prudential sank on March 28 after the Financial Conduct Authority'shead of supervision Clive Adamson was quoted in The DailyTelegraph as saying the FCA would investigate if people lockedin pension pots sold by insurers have been treated fairly.
Investors feared insurers were facing huge compensationbills, but the FCA only clarified the terms of the review sixhours after the stock market had opened, saying that salespractices would not be looked at, signalling a more benignundertaking by the regulator.
Simon Davis, a lawyer at Clifford Chance, was asked to lookinto how the FCA handled its announcement of the insurancereview, said in his report that the strategy and the manner inwhich the Telegraph journalist was briefed was "high risk,poorly supervised and inadequately controlled".
The report, ordered by UK Finance Minister George Osborne,singled out Adamson, FCA head of media Zitah McMillan and headof markets David Lawton for failing to tell the watchdog's chiefexecutive Martin Wheatley about the insurance market selloff ina timely way. (Reporting by Huw Jones, editing by Louise Heavens)