The UK's Financial Conduct Authority, HM Treasury and the British civil service all stand accused of breaking laws and/or regulatory etiquette that no private firm would ever be allowed to break.

The conditions of the enquiry
The FCA gave Davis a room at Canary Wharf; each interview was recorded on two separate machines and transcripts were handed out to all concerned. Maxwellisation - a process named after the late embezzler Robert Maxwell by which people about to be criticised in an official report are sent details of the criticism in advance and allowed to respond before publication - was insisted upon.

Davis' set of instructions stated: "You will not keep the non-executive directors informed as to the progress of the report, except with respect to the logistical progress and the cost of the inquiry, which will not include matters of substance." The instructions acknowledged that he may want to receive information covered by the FCA's legal privilege and that he may do so, but added that the FCA would not be waiving its privilege over it.

Crisis management, the FCA way
Davis found that Adamson received the full text of the online version of the Telegraph article first thing in the morning, before the markets opened and the share prices suffered, and replied “Thanks – looks good.” He did not, however, read the article, despite the concerns he knew his team had about the relevant briefing taking place.

Later he took his first call from furious insurance company men, asking for a retraction. At this point he realised that “a price-sensitive issue had arisen”. He then proposed some soothing wording to be used for the fielding of telephone calls but, according to the report, it “did not contain any input from the life insurance review team and was inadequate”. He did not, says the report, contact any other members of his supervision division or Zitah McMillan of communications. He also failed to tell CEO Martin Wheatley that a price-sensitive episode had begun.

Somehow Wheatley found out that something was amiss and by mid-morning his office was playing a co-ordinating role, but he learned of the gravity of the Telegraph article's effect on share prices slowly and this delayed his office's decision to issue a mollifying statement, which it did in the afternoon. This went some way to restoring the share prices, but the FCA's reputation would never be the same again.

Adamson was also instrumental in one of the most disastrous regulator-approved appointments of all time – that of the Rev Paul Flowers, the “Crystal Methodist” who mismanaged the Co-Op Bank while on ketamine. In January this year Adamson, who had signed off on the appointment that brought chaos to the bank, insisted that he had done nothing wrong. He admitted that it was obvious that Flowers had had no banking experience before his appointment in 2010.

“With the benefit of hindsight, yes I do think we got it wrong, but it was the right decision at the time,” Adamson said by way of explanation. Regulators discovered a capital hole of £1½ billion last year. Andrew Tyrie's comment was: “Regulatory approval for those running banks now appears to include a requirement for some degree of financial expertise. It is scarcely credible that this was not already the case.”

Tracey McDermott, the FCA's head of enforcement, is said to be about to take over Adamson's job. Wheatley, who has ruled out resigning, is thought to be considering asking Mark Stewart, the executive director of and head of enforcement at the Hong Kong Securities and Futures Commission, to step into the breach. Rumour has it that he will have to offer Stewart a fabulous remuneration package to close the deal.

Disclosure for political ends?
In September, before Scotland voted against independence from “rUK”, HM Treasury was reported to have been taking a very close - and allegedly illegal - interest in the outcome. As English politicians were embarking on a last-ditch charm offensive north of the border, the Treasury enmeshed itself in a legal controversy by telling the British Broadcasting Corporation that the Royal Bank of Scotland was planning to relocate from Edinburgh to London in the event of a “yes” vote for independence before this had actually become RBS board-approved policy. To many, this looked like an illegal disclosure of market-sensitive information born of political panic.

Alex Salmond, Scotland's first minister and himself a former economist at RBS, accused the Treasury of using confidential “insider information” that it had obtained in the course of its duties to scare Scottish voters into rejecting independence. He looked forward to an "inevitable investigation”, referring to RBS's proposal to register itself in England if Scotland votes for independence as "market-sensitive", and wanted the BBC to promise to co-operate.

Heywood in the spotlight
Around the time of the Scottish vote, the country's top civil servant was plunged into further controversy, with revelations from the editor of the London Financial Times that Sir Jeremy had spent the previous few months asking business leaders to pour cold water publicly on the economic prospects of an independent Scotland. He told the Today programme: “We know Jeremy Heywood has been on the phone to business leaders asking them to speak up about their concerns.”

Sir Jeremy famously denied that the disclosure breached the so-called Ministerial Code, a set of rules originally drawn up by Tony Blair to impose prime ministerial restraints on ministerial behaviour. Civil servants are legally obliged to be politically neutral.

A lack of accountability
How can HM Government dispel the whiff of sulphur that currently hangs over the regulatory system? Many British compliance officers believe that, for one thing, HM Government should remove the immunity that it gives to the Financial Conduct Authority and gave to its predecessor, the Financial Services Authority.

* In a future article we shall examine a report from 2011 about regulatory immunity from claims for damages, something that it says has unjustly ruined many business people's lives.