Posts tagged "FSA"

FSA orders tests on takeaways after lamb meals found to contain other meat

FSA orders tests on takeaways after lamb meals found to contain other meat

Which? found that 24 out of 60 lamb curries and kebabs tested contained cheaper meats such as beef and chicken. Read more…

Posted by admin - April 18, 2014 at 09:33

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FSA ‘endangering public health’ by ignoring concerns over GM food

FSA ’endangering public health’ by ignoring concerns over GM food

French researcher who claimed GM food caused cancers in rats says UK should review food safety and assess long-term toxicity. Read more…

Posted by admin - September 6, 2013 at 09:49

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Royal Bank of Scotland recruits former FSA regulator

Jon Pain, who worked at Financial Services Authority until 2011, takes new role overseeing regulatory affairs at bailed out bank

A former regulator is joining Royal Bank of Scotland in a newly created role overseeing regulatory affairs and conduct as part of the effort by the bailed out bank to clean up its reputation in the wake of the Libor rigging scandal.

Jon Pain, who was at the Financial Services Authority for four years until 2011, is joining the bank in August as head of conduct and regulatory affairs. He will become one of the most senior executives at the bank, joining the executive committee (just below board level) and potentially earning millions of pounds a year.

Stephen Hester, the RBS chief executive, said: “The creation of this position sends a clear message about how we want to do business – serving customers well, completing our return to a safe and conservative risk profile, and generating sustainable returns for shareholders.

“If we achieve these objectives, and do so in the right way, RBS will become a really good bank.” Hester is keen to oversee the privatisation of RBS, possibly next year.

Pain is joining from accountants KPMG where he was partner for financial services after leaving the FSA as a managing director of supervision in 2011. Before that he had worked for Lloyds from 1973 until 2008.

Pain is among a number of officials who left the FSA before it was carved up in April to become the Financial Conduct Authority overseeing most elements of City behaviour, allowing the new Prudential Regulation Authority to regulate the biggest banks.

His appointment comes in the wake of big banks are facing damage to their reputations from mis-selling scandals and penalties for bad behaviour, such as the £390m fine RBS received for rigging Libor.

Barclays recruited the former FSA boss Hector Sants into a top role overseeing regulation at the start of the year while HSBC has also made changes to its compliance and regulation divisions since it was fined a record £1.2bn for money laundering by US authorities.

Pain’s appointment is the latest in a string of management changes by Hester as a result of the decision to move finance director Bruce van Saun to run the US operation Citizens ahead of its partial stock market flotation next year. Van Saun is being replaced by head of risk Nathan Bostock.

In 2010 when Sants had quit the FSA – before changing his mind and then finally quitting last year – Pain had reportedly been expecting to have replace him, on an interim basis.


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Posted by admin - May 27, 2013 at 08:58

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HBOS: don’t forget the regulators

In the spirit of looking beyond the bankers, consider the senior regulators at the time: the banking commission’s verdict on the FSA’s supervision of HBOS was damning

How far should the fallout from the parliamentary commission’s devastating report on the failure of HBOS extend? Short answer: a lot further yet, whatever is argued in some quarters about the pension-grabbing and knighthood-stripping carrying the air of a witch-hunt.

The truth of the matter is that the country never had a cathartic reckoning after the banking calamity. In its absence – and after the Financial Services Authority’s limp report on Royal Bank of Scotland – the plain-speaking displayed by the commission on banking standards has been welcomed as an honest account of how badly things went wrong. And, given the “colossal failure,” it’s not surprising that the voters expect the baubles and some of the personal fortunes to be returned.

The business lobby may be horrified by the notion that a knighthood may not be for life, but the outside world, still paying the cost of the disasters, is amazed that individuals who failed in important positions can continue to lead charmed careers and enjoy generous pensions. It’s a good thing that this tension may be closer to being resolved. If the process is messy and sometimes arbitrary, that’s unfortunate – but better that the principle of accountability is applied partially rather than not at all.

The constituency that is queasy about “banker bashing” makes one very valid point: that the causes of the crisis were far more complicated than the incompetence of a few individuals at the head of HBOS and Royal Bank of Scotland. Absolutely right: cheerleading politicians and inadequate regulation also played major roles. And we wait to see what the commission says about the role of auditors – KPMG was inspecting HBOS’ books – in its final report.

So how far should the ripples run? In the spirit of looking beyond the bankers and the friendless Sir James Crosby, Lord Stevenson and Andy Hornby, consider the senior regulators at the time. It is now established that the “light-touch” regime established and encouraged by New Labour was a disaster. Even within the context of inadequate rules, though, the commission’s verdict on the FSA’s supervision of HBOS was damning.

“The picture that emerges is that the FSA’s regulation of HBOS was thoroughly inadequate,” the report said. And: “From 2004 until the latter part of 2007 the FSA was not so much the dog that did not bark as a dog barking up the wrong tree.” And further: “Too much supervision was undertaken at too low a level – without sufficient engagement of the senior leadership of the FSA.”

The only qualification is the commission still concluded that “ultimate responsibility for the bank’s chosen path” lay with the board of HBOS – a judgment that must be correct since boards of directors set and implement policies.

Even so, who were the “senior leadership” of the FSA? Well, the chairman of the FSA was Sir Callum McCarthy, who completed at the end of last year a stint as a non-executive director on the board of the Treasury, an appointment that now looks astonishing.

Then there’s John Tiner, who was chief executive of the FSA and soon hopes to lead a bid to buy 316 branches from RBS. Before that arrangement is allowed to proceed, it might be useful if Tiner explained why he thinks he’ll be better at spotting risks at a bank he chairs as opposed to one he regulated.

Nils Pratley


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Posted by admin - April 10, 2013 at 19:21

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Prudential boss given £7.8m pay package

Tidjane Thiam, boss of insurance company Prudential, has been awarded an increased pay package despite recent reprimand

The boss of insurance company Prudential has been given a £7.8m pay package just days after he became the first serving FTSE 100 chief executive to be publicly reprimanded by the City regulator.

Tidjane Thiam was given a £2m bonus on top of his £1m salary and £4.4m from the company’s long-term incentive plan. His total package, revealed in the company’s annual report published on Friday, was 65% higher than last year.

In total, Prudential paid its seven executive directors more than £35m last year, nearly £4m more than a year earlier.

Last week, Thiam was censured by the Financial Services Authority (FSA) for failing to inform the regulator of the insurer’s $35.5bn (£23.4bn) bid for Asian rival AIA.

In addition to Thiam’s embarrassing public dressing down, the regulator fined the Pru £30m because it “failed to deal with the FSA in an open and co-operative manner”.

Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “Prudential, led by Thiam as CEO, failed to give due consideration to its obligation to inform the FSA of this transaction, which would have had a huge impact on the group had it gone through.

“That was a serious error of judgment for which Prudential is paying the price.”

She said the censure was needed to “send a clear message to directors of firms as to the fundamental importance of behaving openly and co-operatively towards the FSA”.

Only £50,000 was docked from Thiam’s 2010 bonus over the botched AIA deal, which angered shareholders who were left with a £377m bill for fees to advisers. Thiam still collected total remuneration of more than £5m that year, but his bonus in the subsequent year was deferred.

At the time of the censure last week, one Pru investor warned that if Thiam’s bonus “isn’t significantly reduced, there could be an issue”.

The FSA said it was forced to censure Thiam and fine the Pru because it “did not inform the FSA of the proposed acquisition until after it had been leaked to the media on 27 February 2010.”

The regulator said Thiam had “played a significant role” in not revealing the deal until it was leaked and that his concern about a leak had “materially influenced” his judgment.

The FSA said the Pru’s advisers at Credit Suisse had told it to disclose the potential deal, but the company chose not to in case the deal would not go ahead.

The acquisition plan, which had leaked out on 27 February 2010, was formally announced on 1 March. It collapsed in June in the face of resistance from shareholders. But the FSA felt it should have been informed about the deal at a private meeting with Pru executives on 12 February, when negotiations were already under way.

The Pru’s chairman Lord Turnbull said the executive pay levels reflected the “excellent results delivered in 2012 [which] built on strong financial performance over recent years”. He said: “This has generated significant returns for shareholders over the period 2010 to 2012 through share price growth and dividends paid.”

The Pru reported a 54% rise in pre-tax profits last year to £2.8bn and increased its full-year dividend by 16%. Its share price has risen by 86% since it scrapped the AIA deal in June 2010.

Rupert Neate


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Posted by admin - April 5, 2013 at 20:07

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Findings shame three executive bankers who brought down HBOS

Bank so poorly run it would have gone bust even without 2008 crash, parliamentary commission finds

The three executives who ran HBOS bank in the runup to its near-catastrophic collapse have been slated for their “colossal failure” of management in a scathing report which calls for them to be held to account by the City regulator.

The highly critical account of the events that led to HBOS being rescued by Lloyds in September 2008 said the responsibility for the management failings rested with the former chairman Lord Stevenson, and the former chief executives Sir James Crosby and Andy Hornby, and says the bank would have gone bust even if the global financial meltdown of that year had not happened. The bank, formed out of Bank of Scotland and Halifax in 2001, racked up £47bn of losses on bad loans.

In a report entitled An Accident Waiting to Happen, the parliamentary commission on banking standards calls on the trio to apologise for their “toxic” mistakes which caused the downfall of the bank and prompted a £20bn taxpayer bailout.

The HBOS report comes in another torrid week for the banking industry after a report commissioned by Barclays found its bankers “seemed to lose a sense of proportion and humility” in their race for big bonuses. The regulation of HBOS by the Financial Services Authority – which was shut down last weekend – is described as “thoroughly inadequate”, but the responsibility for the management failures is placed squarely on the three men.

The report by the commission, set up in the wake of the Libor scandal, said: “The primary responsibility for the downfall of HBOS should rest with Sir James Crosby, architect of the strategy that set the course for disaster, with Andy Hornby, who proved unable or unwilling to change course, and Lord Stevenson, who presided over the bank’s board from its birth to its death.”

Crosby sold two-thirds of his shares just before the banking crisis hit and the bottom fell out of share prices.

Unlike former Royal Bank of Scotland boss Fred Goodwin, Crosby has retained his knighthood and his £570,000 annual pension. Under pressure from parliament Goodwin’s pension was halved to £340,000.

The commission expressed “profound regret” that in the aftermath of the banking crisis the FSA had not imposed “fitting sanctions for those most responsible in a manner which might serve as a suitable deterrent for the next crisis”. Only one HBOS executive, Peter Cummings, who used to run the corporate division of the bank, has faced sanctions. He has been banned from the City and fined £500,000.

In the first detailed account of what went wrong at HBOS – valued at £30bn when it was created in 2001 – the commission concludes that the bad loans alone would have pushed HBOS into bankruptcy. That view contrasts with those who used to run the bank, who blamed the seizure in the financial markets for its downfall.

“The sums would never have added up,” said Andrew Tyrie, the Conservative MP who chairs the commission.

While the bankers have apologised for failing to spot the crisis, their words “ring hollow” and “an apology is due for the incompetent and reckless board strategy”, the report said. The commission’s report calls for City regulators to conduct a review of whether the three former bankers are “fit and proper” to ever work in the City again. Another report into HBOS by the successor bodies to the FSA is still under way and Tyrie asked them to consider whether the three should be barred from working in finance in the future.

“Those responsible for bank failures should be held more directly accountable for their actions and face sanction,” he added. Crosby is now an adviser to Bridgepoint, a private equity business, but that role does not require authorisation.

The commission published its report after taking evidence from 16 former HBOS bankers and those who regulated the bank. Stevenson, a crossbench peer who has been employed by governments to conduct a series of high-profile reports, now works for a number of charities.

Hornby, who took over as chief executive from Crosby and was regarded as the business wunderkind of his generation, is now boss of bookmakers Coral.

The report is scathing about Stevenson, who in his evidence had insisted he was not to blame because he was only “part time”, despite earning £735,000 a year and insisting to regulators at the time that he was fully engaged at the bank.

Stevenson was “incapable of facing the realities of what placed the bank in jeopardy from that time until now”.

The report added: “We are shocked and surprised that, even after the ship has run aground, so many of those who were on the bridge still seem so keen to congratulate themselves on their collective navigational skills.”

In other evidence, HBOS board members had described the board as the best they had ever sat on, which sparked the commission to conclude: “The model of corporate governance at HBOS at board level serves as a model for the future but not in the way in which Lord Stevenson and other former board members appear to see it. It represents a model of self-delusion, or the triumph of process over purpose.”

The three bankers declined to comment, while the Financial Conduct Authority, one of the bodies replacing the FSA, said it was considering the report’s findings. “The FCA will be publishing its report on the failure, that was started under the FSA, at a later date,” the FCA said.

A year ago the FSA decided not to hit the Bank of Scotland arm of Lloyds with a “very substantial” fine because it would have been picked up by the taxpayer, but lambasted the division for “very serious misconduct” in following an aggressive, high-risk growth strategy.

Jill Treanor


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Posted by admin -  at 07:00

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FSA inaction over mortgage rate hikes sparks row with MPs

Regulator criticised over response to banks’ plan to invoke loan clause that significantly increases customers’ payments

MPs are demanding answers from the City regulator about whether borrowers have been treated unfairly, as a row rages over a decision to dramatically increase monthly payments for thousands of Bank of Ireland and Bristol & West mortgage customers.

The Financial Services Authority (FSA) revealed it was not planning to take any action, as the matter fell outside its remit – prompting criticism from the chairman of the Commons Treasury select committee.

In February 2013 it emerged that around 13,500 Bank of Ireland UK customers – including people who originally signed up with its Bristol & West division – will see their monthly mortgage costs soar as a result of changes being made to some of its base-rate tracker deals.

Some borrowers’ bills will double or triple after the lender said it was invoking a little-known clause in loan agreements. Almost half of those affected hold standard residential home loans, while the rest are buy-to-let landlords.

One customer, Gary Smith, said his monthly mortgage payment would be shooting up from £243 to around £780 after Bank of Ireland said it was increasing the interest rate “differential” (the extra percentage on top of the base rate) on a proportion of its UK tracker mortgages.

The rate hike will be applied in two stages for residential customers. From 1 May, the new differential will be 2.49%, rising to 3.99% on 1 October. Buy-to-let borrowers will suffer the increase all in one go. They typically pay around 2.25% (base rate plus a 1.75% differential) but will see this jump to 4.99% on 1 May. The bank said it was triggering a “special condition” clause that allowed it to increase the differential.

Andrew Tyrie, the Treasury select committee chairman, wrote to the FSA earlier this month and posed a number of questions about whether or not the agreements contained unfair clauses, whether this amounted to mis-selling, and how many other lenders had such clauses in their small print.

The FSA’s managing director, Martin Wheatley, wrote back to say that the regulator’s rules did not apply in this case because the mortgages affected by the decision were taken out before the FSA started policing home loans in 2004. In addition, some are buy-to-let mortgages, which are not regulated by the FSA. He added: “We do not plan to take further action … However, we will continue to ensure Bank of Ireland UK treats those customers who have been impacted by the change, fairly.”

Tyrie has now written back, saying this response “does not address the main issues” and poses more questions. The MP said: “We need more information to be confident that the regulator has thought carefully about this issue. It must exercise judgment to ensure that customers are being treated fairly. Mr Wheatley’s letter appears to fall short on both counts.”

Rupert Jones


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Posted by admin - March 29, 2013 at 10:18

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FSA inaction over mortgage rate hikes sparks row with MPs

Regulator criticised over response to banks’ plan to invoke loan clause that significantly increases customers’ payments

MPs are demanding answers from the City regulator about whether borrowers have been treated unfairly, as a row rages over a decision to dramatically increase monthly payments for thousands of Bank of Ireland and Bristol & West mortgage customers.

The Financial Services Authority (FSA) revealed it was not planning to take any action, as the matter fell outside its remit – prompting criticism from the chairman of the Commons Treasury select committee.

In February 2013 it emerged that around 13,500 Bank of Ireland UK customers – including people who originally signed up with its Bristol & West division – will see their monthly mortgage costs soar as a result of changes being made to some of its base-rate tracker deals.

Some borrowers’ bills will double or triple after the lender said it was invoking a little-known clause in loan agreements. Almost half of those affected hold standard residential home loans, while the rest are buy-to-let landlords.

One customer, Gary Smith, said his monthly mortgage payment would be shooting up from £243 to around £780 after Bank of Ireland said it was increasing the interest rate “differential” (the extra percentage on top of the base rate) on a proportion of its UK tracker mortgages.

The rate hike will be applied in two stages for residential customers. From 1 May, the new differential will be 2.49%, rising to 3.99% on 1 October. Buy-to-let borrowers will suffer the increase all in one go. They typically pay around 2.25% (base rate plus a 1.75% differential) but will see this jump to 4.99% on 1 May. The bank said it was triggering a “special condition” clause that allowed it to increase the differential.

Andrew Tyrie, the Treasury select committee chairman, wrote to the FSA earlier this month and posed a number of questions about whether or not the agreements contained unfair clauses, whether this amounted to mis-selling, and how many other lenders had such clauses in their small print.

The FSA’s managing director, Martin Wheatley, wrote back to say that the regulator’s rules did not apply in this case because the mortgages affected by the decision were taken out before the FSA started policing home loans in 2004. In addition, some are buy-to-let mortgages, which are not regulated by the FSA. He added: “We do not plan to take further action … However, we will continue to ensure Bank of Ireland UK treats those customers who have been impacted by the change, fairly.”

Tyrie has now written back, saying this response “does not address the main issues” and poses more questions. The MP said: “We need more information to be confident that the regulator has thought carefully about this issue. It must exercise judgment to ensure that customers are being treated fairly. Mr Wheatley’s letter appears to fall short on both counts.”

Rupert Jones


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Posted by admin -  at 10:18

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FSA criticised over response to Bank of Ireland interest rate rise

Financial Services Authority accused of ‘falling short’ in calling to account Irish bank’s raising of rates on tracker mortgages

City watchdog the Financial Services Authority has been accused of “falling short” in its efforts to call to account the Bank of Ireland for raising interest rates paid by thousands of mortgage holders.

The embattled Irish bank told 13,500 customers in March that tracker mortgages, which take the Bank of England base interest rate and add a percentage, would rise steeply in May – despite base rates being unchanged.

Payments will double and in some cases triple for borrowers. Almost half of those hit hold standard residential home loans, while the rest are buy-to-let landlords, some of whom may have a dozen or more mortgages.

Parliament’s Treasury select committee is unhappy with the FSA’s response to the debacle, and wants more checks to ensure other banks will not use the same loopholes to extract higher payments from their customers.

On Thursday the committee published an exchange of letters between its chairman, Andrew Tyrie MP, and the FSA managing director Martin Wheatley, in which questions are raised about whether the FSA was distracted from dealing with the issue because it was preparing for its own reorganisation. The watchdog will be split into two separate bodies next week.

Tyrie said: “We need more information to be confident that the regulator has thought carefully about this issue. It must exercise judgment to ensure customers are being treated fairly. Mr Wheatley’s letter appears to fall short on both counts.”

He has asked the FSA to ensure that Bank of Ireland customers hit by the surprise rate rise were warned this could happen when they took out their mortgages, and demanded to know whether other lenders would be allowed to include similar terms in future. A spokesman for the watchdog said it would respond in due course.

Bank of England base rates are at a historic low of 0.5% and unlikely to rise for a few years. For residential borrowers, the Bank of Ireland will increase the amount it adds to the base rate to 2.49% in May, and again to 3.99% in October. Buy-to-let borrowers will take a single hit, seeing their rate rising from 2.25% to 4.99% in May.

In a 2008 speech, the FSA vowed to police tracker mortgage rates, saying tracker interest rate “floors” needed to be “clear and unambiguous to the consumer” and “consistently and prominently spelt out” in the lender’s documentation. “If it is not, you run the real risk of both breaching our disclosure requirements and having an unfair contract term you can’t enforce,” said the regulator.

This month, it emerged Bank of Ireland chief executive Richie Boucher had been awarded his first pay rise since being appointed in 2009. His remuneration rose to just over €840,000 (£700,000), a €12,000 increase, despite losses of more than €2bn at the lender.

Juliette Garside


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Posted by admin - March 28, 2013 at 19:53

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Prudential boss Tidjane Thiam censured by FSA over ill-fated AIA bid

City regulator takes unprecedented action against Thiam as it fines the Pru £30m for not being open and co-operative

Tidjane Thiam, the head of Prudential, has become one of the highest profile chief executives to be personally censured by the financial regulator, following an investigation into the insurer’s ill-fated bid for AIA three years ago.

The Pru was also fined £30m by the Financial Services Authority (FSA) for failing to be “open” and “co-operative” with the watchdog over the proposed £21bn takeover, which the FSA only found out about through the media. The Pru would have needed to pull off the largest cash call in British corporate history – £14.5bn – if the deal for the Asian arm of the US insurer AIG had succeeded.

Censuring Thiam, the regulator said it was “necessary to send a clear message to directors of firms as to the fundamental importance of behaving openly and co-operatively towards the FSA”.

The FSA is in its last week of existence before being closed down and replaced by the Financial Conduct Authority, which is expected to impose greater scrutiny on the role of senior executives. Some City sources said on Wednesday that the FSA’s action represented the start of this new approach and was too heavy handed.

Attention may turn to the pay of Thiam, who had £50,000 docked from his bonus for 2010 – when his remuneration totalled £5m – as a penalty for the botched deal, which left angry investors with a £377m bill for fees to advisers. His bonus in the subsequent year was deferred and it is understood that the regulatory action will not have any impact on his pay for 2012, likely to be announced next week.

While investors credit Thiam with a doubling in the Pru’s stock market value since the ill-fated deal, they were also said to be keeping an eye on his payout. “If his bonus isn’t significantly reduced, there could be an issue,” one said.

Thiam and the Pru had been disputing the FSA’s action but the insurer’s chairman, Paul Manduca, said it was time to “draw a line under the matter”. There was no discount on the fine – something usually given to those who settle early.

Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “Prudential, led by Thiam as CEO, failed to give due consideration to its obligation to inform the FSA of this transaction, which would have had a huge impact on the group had it gone through. That was a serious error of judgment for which Prudential is paying the price.

“Thiam has also been censured in relation to his role in this matter. This case should send a clear message to all board members of their collective and individual responsibility for the decisions they make on behalf of their companies.”

The FSA said the Pru’s advisers at Credit Suisse had told it to disclose the potential deal, but that the Pru had been concerned, as it was not certain that the deal would proceed and feared news might leak out.

The deal was formally announced on 1 March 2010 but had leaked on 27 February. It collapsed in June in the face of resistance from shareholders. But the FSA felt it should have been informed about the deal at a private meeting with Pru executives on 12 February, when it was already under negotiation.

“The proposed transaction’s size and scale would have transformed the group’s financial position, strategy and risk profile … and involved a planned rights issue of £14.5bn, which would have been the biggest ever in the UK. The transaction had the potential to impact upon the stability and confidence of the financial system in the UK and abroad,” the FSA said.

The regulator said Thiam had “played a significant role” in not revealing the deal until it was leaked, and that his concern about a leak had “materially influenced” his judgment. But some City figures expressed surprise that Thiam had been publicly rebuked when many top bankers have not received similar treatment.

The FSA stressed that the investigation was into “past events and does not concern the current conduct of the management of the Prudential group”.

Thiam is a leading figure in the insurance industry and chairs the the Association of British Insurers, which said it had no intention of asking him to resign.

Manduca said the chief executive “acted at all times in the interests of the company and with the full knowledge and authority of the board”, adding: “The board wishes to express its satisfaction that all parties have agreed to this settlement.

“Over the past three years, our successful business strategy, led by Tidjane, and fully supported by the board, has delivered excellent results for customers, shareholders and employees. This was most recently demonstrated by our strong annual results for 2012.”

Jill Treanor


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Posted by admin - March 27, 2013 at 19:14

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