The expense incurred for the Davis Review has been released by the regulator this afternoon – as well as the fact that senior managers will lose their bonuses over the mistakes made. Chief executive Martin Wheatley is among those who will not get a bonus of up to £115,000 for 2013/14.
The report was about the mistakes made by the FCA in March, which led to insurance firms seeing £6bn wiped off their shares. The law firm, Clifford Chance, produced the report.
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In total, including VAT, the probe cost £3.8bn, with £2.04m going to Clifford Chance. The costs include advice to FCA and witness representation - £1m – paid to Kingsley Napley. Strategic communications advice from FTI Consulting cost £60,000 and IT support from Fujitsu was £50,000.
Explaining the amount to produce the report, the FCA said in a statement: "An independent report of this length and complexity inevitably calls for a high level of specialist expertise and has incurred some costs. The total costs of the report since it was commissioned in April this year have been £3.15m excluding VAT, and £3.8m including VAT."
The regulator also announced that senior bosses will give up their bonuses as a result of the mistakes identified in the review.
The FCA said: "In considering Mr Davis' report the FCA Non-Executive Directors recognised that a number of individuals made errors. Having thoroughly reviewed the report the Non-Executive Directors have agreed the following actions.
"Chief Executive, Martin Wheatley, Director of Supervision, Clive Adamson, Director of Communications and International, Zitah McMillan and Director of Markets, David Lawton will not be receiving a bonus for 2013/14.
"Reflecting their collective responsibility, the 2013/14 bonus payments for all other members of Executive Committee have been reduced by 25%. Other disciplinary action has been completed as appropriate."
The FCA was severely criticised for its handling of the key announcement on life insurance in the report.
The investigation found the regulator's reaction was "seriously inadequate" and said the FCA has fallen short of the standards expected of those it regulates.
The regulator has fully accepted the criticisms and apologised for the mistakes it made. The problems arose from a briefing given to the media in advance of the official announcement.